Tesla Warns of Revenue Hit from Trump's Tax Bill and Loss of EV Credit Sales

Tesla warned that President Trump's $3.4 trillion fiscal package will hurt its sales of regulatory credits to rival automakers, leading to lower earnings. The bill eliminates civil penalties for automakers and the $7,500 tax credit for EV purchasers after September. Tesla may not be able to guarantee deliveries of new Teslas before the tax credit expires.

Tesla Inc. (TSLA) has warned that President Trump's $3.4 trillion fiscal package, passed earlier this month, could significantly impact its sales of regulatory credits to rival automakers, potentially leading to lower earnings. The bill eliminates civil penalties for automakers, removing their financial incentive to purchase regulatory credits from Tesla. Additionally, the bill phases out the $7,500 tax credit for electric vehicle (EV) purchasers by September 30, 2025.

Regulatory credit sales have been a substantial source of revenue for Tesla, with the company earning $10.6 billion since 2019. These credits have been crucial for Tesla's financial stability, especially during periods of sales and profit slumps [1]. However, with the new fiscal package, Tesla is expected to see a 75% decline in regulatory credit revenue next year, with sales disappearing completely by 2027 [1].

Moreover, the expiration of the $7,500 tax credit for EV purchasers could also affect Tesla's sales. The company has warned that it may not be able to guarantee deliveries of new Teslas before the tax credit expires, potentially leading to lower sales volumes [3]. This could be particularly challenging for Tesla, which has been facing a sales and profit slump [1].

General Motors (GM) has positioned itself to benefit from the changes. Chevrolet is now the second-largest EV brand in the U.S., with Cadillac leading luxury EV sales. GM's CEO Mary Barra stated that GM EVs are doing well due to customer demand for range and performance [2]. This shift in consumer preferences could further exacerbate Tesla's financial challenges.

In conclusion, Tesla's regulatory credit revenue and EV sales could be significantly impacted by the changes in the fiscal package. The company will need to adapt its business strategy to navigate these new challenges.

References:
[1] https://sg.finance.yahoo.com/news/tesla-lose-key-source-revenue-115600811.html
[2] https://www.benzinga.com/markets/equities/25/07/46564633/gm-says-chevy-is-now-the-no-2-ev-brand-in-us-4-billion-factory-push-to-offset-trump-tariffs
[3] https://www.usatoday.com/story/cars/shopping/evs/2025/07/22/ev-tax-rules-tax-credits-expire/85311190007/