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Donald Trump is looking to end a major regulatory policy that has helped keep Elon Musk’s electric vehicle manufacturer Tesla afloat for years, as the self-proclaimed “First Buddy” prepares to step back from the administration.
So far, the president has been protective and even promotional of his advisor’s brand, having staged a strange photo-op and sales pitch outside the White House, and even branding those who vandalized the vehicles as “domestic terrorists.”
However, according to CNN, the Trump administration is now mulling over axing both federal emissions regulations and the stricter standards in states, including California, that are set to ban the sale of traditional gas vehicles by 2035.
This would be bad news for Musk and Tesla, as the regulations have previously allowed the company to claim hundreds of millions of dollars of regulatory credits.
Regulatory credits, also known as emissions credits or carbon credits, are given to manufacturers by governments for producing and selling zero-emission vehicles, including EVs.
It is possible for companies such as Tesla to sell them to other manufacturers, who need them to meet emission standards and avoid being fined.
On Monday, Tesla’s Q1 earnings report showed a profit of $409 million, CNN reported, though this was only possible due to the sale of $595 million of regulatory credits. Without those sales, Tesla lost around $186 million.
If Trump follows through on his reported plan to nix the regulations, Tesla would no longer be able to claim or sell their credits.
Since 2021, Tesla has made some $8.4 billion from selling the credits, and ensuring it remained profitable even in Q2 of 2021 through to this year, when it has dipped into a negative balance for the first time since then.
This is despite the controversy surrounding the brand, exacerbated by Musk’s ties to the Trump presidency.
In recent months, Tesla sales have nosedived internationally, with the stock market tumbling after Trump’s announcement of so-called “Liberation Day” tariffs. Though the majority of Teslas are made in the U.S., they still rely on parts shipped in from abroad.
On the customer side, it appears that Musk’s link to the administration via his controversial Department of Government Efficiency may also be turning off those who would previously have considered buying a vehicle.
The brand’s Cybertrucks, which start at around $80,000 and cost up to over $100,000, have also been hit by concerns over safety and quality, resulting in a series of recalls.
It comes as Musk announced he would be reducing his time with the DOGE, beginning next month, following the poor Tesla results.
In an earnings call last Tuesday, he said that the ongoing Tesla, consisting of nationwide protests and violent vehicle attacks, left him with two options: Let the government’s waste and fraud continue or fight it.
English (US) ·