Tesla Inc. CEO Elon Musk has spoken out about the “Big Beautiful Bill” backed by President Donald Trump and Congress. The bill is expected to make it more expensive for consumers to buy electric vehicles and provide less credits for EV companies.
Analyst Insight
One analyst believes the bill will hurt Tesla in multiple ways. William Blair analyst Jed Dorsheimer has downgraded Tesla stock from “Outperform” to “Market Perform”. According to Dorsheimer, the recently passed “Big Beautiful Bill” could be too much for Tesla stock to overcome.
Key Takeaways from the Analyst
- The removal of the $7,500 EV tax credit for consumers was expected, but the elimination of the corporate average fuel economy (CAFE) fines was less expected and requires a reset.
- The loss of the EV $7,500 tax credit could negatively impact demand for Tesla vehicles among consumers.
- The removal of regulatory credit revenue could directly hit Tesla’s profitability.
- The bill eliminates market demand for Tesla’s credits, with the company earning $2.8 billion from selling these credits in 2024, making up 16% of its total gross profit.
- Dorsheimer estimates that 75% of Tesla’s regulatory credit revenue is related to the CAFE standards and now gets zeroed out in 2027.
Impact on Tesla’s Stock
The analyst stated that the removal of the $7,500 consumer tax credit could lead to an increase in unit volumes in the third quarter and put pressure on the fourth-quarter figures. Along with the weakened demand and lower profits from regulatory credits, the analyst cites Musk’s political push as a potential distraction for the electric vehicle company.
Risks and Valuation
The analyst notes that Tesla stock now trades at an enterprise value of 76 times its lowered 2026 EBITDA estimates. Risks for Tesla from the analyst include:
- Competition
- Geopolitics
- “Key-man risk” with Musk
Current Stock Price
Tesla stock was up 1.3% on Tuesday to $297.81, versus a 52-week trading range of $182.00 to $488.54. Tesla stock is down 20.4% year-to-date in 2025.