Trump’s “Big Beautiful Bill” will eliminate Tesla’s US regulatory credits, also known as ZEV credits. Under the current system, automakers failing to meet zero-emission vehicle quotas must either pay a fine or purchase credits from companies like Tesla, which generate excess credits. 1/2
Aren't ZEV credits a state thing? They aren't even transferrable between states. Can the federal government just kill them?
Congress abolished the special exemption extended to California to make its own rules.
Check out Sawyer's explanation. I agree with his interpretation. I also looked into this topic using Perplexity AI. x.com/SawyerMerrit...
@thomashansen.bsky.social
As always;-)
Does Tesla have any other path to profitability in the next 2 years? At what point does it get kicked out of the S&P…. Or can you stay unprofitable forever once you are included? Cc: @montanaskeptic.bsky.social
Tesla is barely profitable now, but the share price is founded on fantasies. Do you believe in miracles? If not, its forward P/E is about 300. How long can that last? There are various rules, but it probably wouldn’t get kicked out until its market cap is no longer in the top 500.
And then the FBI will likely "investigate" SPGI for removing TSLA from the S&P500.
Trump will be toast by then. His pornographic budget and tax bill & fiscal recklessness will prove catastrophic quite soon, alas.
Thanks, I was hoping that you couldn’t be unprofitable for more than a few quarters before getting kicked out of the index funds that millions of Americans businesses plow their retirement into, but I haven’t studied it.
If there’s one thing we know about Elon, it’s that he won’t allow "consistent negative earnings" to happen when the stock price is at stake. SEC and all that.
Jibby-cloud management systems do look interesting.
Just one perspective about the silly valuation. It's bound to crash but when is not certain. bsky.app/profile/heik...
I guess going all in on a bunch of climate change denying mouth breathers wasn’t such a grand idea in retrospect.
Calculated gamble. He did get all of the investigations against his companies shut down, potentially saving $5 billion in fines. And I am suspecting he really thought he might go to prison if Kamala won.
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No wonder Elon was pissed.
He spent hundreds of millions of dollars to elect a guy who will destroy his companies. And he knew what the guy thought of EVs, solar ,tariffs etc. It breaks my mind to comprehend how can he be pissed. He took out a gun, loaded it, cocked it, shot off his balls.And he is pissed now.
For us non econ people please
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Other car makers that didn’t sell enough EVs had to buy ZEV credits to avoid paying fines. Tesla had the most ZEV credits because all they make is EVs so they basically got free $ for selling them. Now there are no fines for other carmakers for not selling EVs, hence the ZEV credits program is dead
It’s this plus the double whammy of buyers no longer getting $7500 off the purchase price which was more than 100% of Tesla’s margin per vehicle.
Yes and losing the ZEV credits actually hurts Tesla substantially more than losing the $7500 credit does because Tesla was the only company that actually benefited from the ZEV credit program (at the expense of all other car makers)
When is this becoming effective, also 01.10.25?
Tesla sells these credits at a discount compared to the fine, making them the cheaper option. The new bill reduces the fine to zero, removing the need to buy credits. As a result, Tesla’s US regulatory credits will become worthless, though they will continue to earn credits in Europe and China 2/2
That is a massive hit to Tesla's finances!
In Europe, 2025-2027 will be meassured combined, i.e. you can compensate in 2027 your missed average in 2025/2026 This was implemented earlier this year But I'm totally ignorant as to how the contract within the pooling makes works. Is Tesla getting money now? Accruing? If accruing.. wow, finished
This is really interesting US credits are out and with Tesla sales slowing in the EU (don't know if Norway sales are included, if not then even worse for Tesla). Stellantis at least will keep buying EU credits it seems.
They are indeed finished financially. Their only positive contribution to Q1/2025 ledger was: - income from interest - sales of energy credits as highlighted by Troy They are toast!
Almost right. This is the fuel economy standards, for which automakers pay penalties for falling short, not the ZEV standard, which is a California thing. Congress is also trying to end the Clean Air Act waiver that gives Cali the ability to set this (and 12+ states to follow), probably illegally.
The way this is being interpreted is that there is no longer any fines for carmakers not making enough EVs, so it doesn't matter if it's federal or state credits, there is no automaker that needs to buy them now because they aren't getting fined anymore. Are you saying this is wrong?
Trump is also going to repeal the EPA tailpipe regs, another third source of compliance credit revenue for Tesla and other pure EV automakers (Rivian, Lucid). So all 3 regimes are under attack and likely goners (Cali waiver most plausible to survive). Plus no more tax credits! Bad for Tesla & USA
Will the Trump EPA try to just repeal the EPA tailpipe regs with..nothing..? Or leave them at the MY2026 level? Too early to know? Standards are required under the CAA
When do you think they will successfully repeal the EPA?
Am I reading that wrong? Does it come into effect as soon as Trump signs the damned thing?
It does say that meaning it applies almost to the entirety of Tesla’s 3d qtr.
• $7,500 federal tax credit ends after Sep 30, 2025. • Regulatory credits in the US end tomorrow. The Big Beautiful Bill cancels both of them.
the regulatory credits end tomorrow. but is that effective through the beginning of the model year (circa 9/2024)?
Thanks for that reminder, Troy. Last time I checked, Tesla had 125,665 employees. I'm betting Tesla will soon trim another 10% of its workforce within the next 90 days. Earnings are on 23 Jul 25, so Musk might feel pressured to cut workforce before then.
