Trump's 'Big Beautiful Bill' Too Much For Tesla Stock: 'Direct Hit To Profitability'

Tesla Inc. TSLA CEO Elon Musk has spoken out about the “Big Beautiful Bill” backed by President Donald Trump and Congress on several occasions. The bill will make it more expensive for consumers to buy electric vehicles and provide less credits for EV companies.

One analyst says the bill will hurt Tesla in more ways than one.  

The Tesla Analyst: William Blair analyst Jed Dorsheimer downgraded Tesla stock from “Outperform” to “Market Perform” in a recent investor note. The analyst does not have a price target on the stock.

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The Analyst Takeaways: The recently passed "Big Beautiful Bill" could be "too much" for Tesla stock to overcome, Dorsheimer said in a new investor note.

The analyst said 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.

"While the $7,500 tax credit is likely to affect demand, the combination of a demand headwind and over $2 billion in profit from regulatory credits at risk may be too much for investors to bear," Dorsheimer said.

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 analyst adds.

"No More CAFÉ Fines, No More Credit Buyers."

The analyst said the bill eliminates market demand for Tesla's credits. The company earned $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.

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.

"We expect that investors are growing tired of the distraction at a point when the business needs Musk's attention the most and only see downside from his dip back into politics."

The analyst said 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 and "key-man risk" with Musk.

TSLA Price Action: Tesla stock was up 1.3% 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.

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Image created using artificial intelligence via Midjourney.