Tesla loses billion-dollar revenue source as US ditches fuel economy fines

# Tesla loses billion-dollar revenue source as US ditches fuel economy fines Elon Musk’s EV company has lost a significant income stream due to the end of US penalties for automakers that exceed fuel economy standards. For the first time in 50 years, automakers in the US will no longer be fined for failing to meet fuel consumption standards, significantly impacting a major revenue stream for electric vehicle (EV) maker **Tesla**. US President Donald Trump’s July 4 (2025) bill ended penalties for automakers that do not meet North America’s world-leading CAFE (Corporate Average Fuel Economy) standards, first introduced in 1975. It acts retrospectively, with automakers not liable for any penalties incurred from and including 2022. According to [*Reuters*](https://www.reuters.com/business/autos-transportation/us-tells-automakers-they-face-no-fuel-economy-penalties-last-three-years-2025-07-16/), the National Highway Traffic Safety Administration (NHTSA) is “working on its reconsideration of fuel economy rules”. The same bill also terminated US federal tax credits for new and used EVs of between $US4000-$7500 (A$6137-$11,507), which will end on September 30, 2025. The [US Department of Transportation](https://www.transportation.gov/mission/sustainability/corporate-average-fuel-economy-cafe-standards) (DOT) describes CAFE’s purpose as “to reduce energy consumption by increasing the fuel economy of cars and light trucks”. It adds: “When these standards are raised, automakers respond by creating a more fuel-efficient fleet, which improves our nation’s energy security and saves consumers money at the pump, while also reducing greenhouse emissions”. The removal of fines is a boost for the bottom line of some of the world’s largest car manufacturers, including [Ford](https://www.carexpert.com.au/ford), [General Motors](https://www.carexpert.com.au/car-news/why-gm-chose-to-bring-yet-another-brand-to-australia) (GM) and [Stellantis](https://www.carexpert.com.au/car-news/stellantis-everything-you-need-to-know-about-the-new-automaker) – the latter of which has US brands including [Jeep](https://www.carexpert.com.au/jeep), Chrysler, Dodge and [Ram](https://www.carexpert.com.au/ram) under its umbrella.  According to *Reuters*, Stellantis paid almost $US600 million (A$921m) in CAFE fines between 2016 and 2020, while GM paid $US128.2 million (A$196.7m) in penalties between 2016-2017. Tesla, on the other hand, has now suffered a major blow to one of its most important revenue streams. The EV company raked in $US2.76 billion (A$4.23bn) in 2024 alone from selling ‘carbon credits’ to other automakers, including credit revenue collected in other markets such as Europe. The company’s 2024 credit revenue represented a 54 per cent year-on-year increase, yet it wasn’t enough to prevent a fall in profit from $US15 billion (A$23bn) in 2023, to $US7.1 billion (A$10.89bn) for the 2024 calendar year, when the [Toyota RAV4 also poached the title of world’s best-selling car](https://www.carexpert.com.au/car-news/toyota-rav4-topples-tesla-model-y-as-worlds-best-selling-car) from the [Model Y](https://www.carexpert.com.au/tesla/model-y) by fewer than 3000 sales.

continued - The EV brand was already under stress from the first recorded annual sales decline in its history – [with deliveries sliding by 1 per cent in 2024](https://www.carexpert.com.au/car-news/teslas-australian-sales-slump-continues-into-2025) – even before the elimination of revenue from carbon credits. “If things go bad for Tesla and they don’t sell enough cars this year, they might not have enough credits for what they promised Stellantis and the others,” Peter Mock, managing director of the [International Council on Clean Transportations](https://theicct.org/) (ITCC) told [*Politico*](https://www.politico.eu/article/tesla-plummeting-sales-risk-emissions-credit-earning/) in March. “Tesla is under pressure.” With these credits disappearing in the US, the pressure on Tesla has now increased.  Under CAFE, fuel economy (and therefore emissions) was averaged across all models sold by a manufacturer, with those exceeding the limits able to buy ‘credits’ from those that haven’t.  Doing so allows automakers in breach to lower their average fuel consumption figure to reduce or avoid fines.  EV-only brands such as Tesla and [Polestar](https://www.carexpert.com.au/polestar) were able to make considerable profit from US credits, while also ‘pooling’ credits with automakers struggling to meet ever-tightening emissions laws in Europe.

So Elon spent all that money buying that election for nothing?

That's good. They never deserved it

Tesla is, what's the term 🤔, oh yeah, f**ked six ways to Sunday...

Put this in perspective: Tesla reported revenue in the amount of $2.76 billion from regulatory credits in fiscal 2024 and $595 million in the first quarter of 2025. Tesla's Q1 2025 earnings report did show a significant drop in net income, falling 71% to $409 million from $1.39 billion in the same period last year.  This means Tesla will be in red going forward with cafe credit unless they sell boats loads of new cars. Say hello to Q1 2026 report to see impacts of Trump effect on EVs.

His company was built on back of gov programs abd he qent on rampage killing the same programs and others that helped him. I wouldn't mind tesla going to zero

So stock goes up?

he got to hang with donald though lucky guy. trump destroys everything he touches

Nah he doged away any investigations for securities fraud. So he's not going to jail like he should.

No problem, they’ll just offset that revenue with the new LA diner.

>what's the term 🤔, oh yeah, f**ked six ways to Sunday... Hey man, there's no need to get so technical about it...

Love it

Billionaires are never going to jail. The investigations going away only extends how long Tesla can tread water while carrying $800 Billion worth of market cap it doesn’t deserve.

He really deserves the 50 billion compensation package now.

Not just for nothing. He spent all that money to get fucked.

Declining sales and brand value combined with elimination of fuel economy credits as a source of billions… put a fork in it.

And the ponzi fraud scam stock will still go up

u/likewut pointed out that the was able to drop investigations for fraud. So maybe a net plus for him still.

How much did the stock price go up on this terrible news?

He should go to jail for the Paint It Black video fraud.

Now hes betting on the Epstein files

It usually does on bad news.

Doesn't show up until the next earnings tho, I presume. Time for Elon to get on stage and lie to juice the stock.

Tomorrow Tesla will present the sales figures. They are not good even with the most aggressive discounts so far. And yet, I bet TSLA will not react in a bad way.

> Say hello to Q1 2026 report to see impacts of Trump effect on EVs. I view it more as the tax payer subsidised gravy train and federal aid for Tesla coming to an end.

It might, but they offer huge discount last months to keep higher deliveries. Investors will be pleased as long as cars are produced & delivered.

Ah so this is why he was fighting for his 50mil compensation

Money well spent.

and he dismantled a bunch of the regulations and oversight that would cut into his profits

I'm in the Netherlands right now vacationing with family and Tesla is absolutely everywhere. More prevalent even than what I saw back home in New Jersey, I think. They were in such a great position to be a massive global brand and I'm guessing far fewer here will be buying them going forward.

Mil? Bil.

There are no higher deliveries, they're just trying to stop the bleeding.

I’ve never seen a CEO own goal himself so thoroughly

Of course not. Now that Tesla is about to absolutely dominate the multi trillion diner market, they can leave the financial anvil that is the car market behind. Tesla is no longer a car manufacturer, but a food service company in its growth phase and will have to be priced as a growth stock for the foreseeable future and

It was a Hail Mary. Tesla is pretty clearly cooked in China- they own the batteries, they own the natural resources, they have government backing and are willing to dump to destroy rivals. He wss going for classic regulatory and legislative capture- hoping Trump really didnt have this hate boner for EVs and he could twist the tariffs and ending of subsidies to benefit only him- and get some more government contract. But surprise, Trump really does think that EVs represent an existential threat to US industry. I don’t agree with the overall package and atavistic approach to destroying green energy initiatives. But we don’t need to be subsidizing suburban homeowners to lease an EV as a 2nd or 3rd car to a tune of nearly 20%. If EVs are really guaranteed to last 30 years and invincible- they can compete on a level field of play.

Somehow, perversely, bullish.

Sales have dropped 75% in the Netherlands in 2025.

Lol I'd like to imagine this was actually one of the crazy ideas that 3am ketamine Elon came up with.

Astronomer's CEO did a pretty thorough job of ending his career last week. Elon's probably still cashed in enough tax cuts and opening crypto schemes to make most of this worthwhile.

missed an /s there at the end

RealTesla is a no /s zone

Can I sell my clean piss test to a drug addict so they can ‘pool’ their drug test results? Pretty much what this is.

In a sane world they would tax on the weight of the vehicle, not the engine. Put a yearly tax on every pound over an arbitrary number. The less mass you have to move the less material you need in components and that also reduces mass. Fuel economy would skyrocket if cars weighed the same as they did 20 years ago with the engines we have today. Emissions are way beyond diminishing returns, the .0001% of emissions they save by making a completely sealed engine and removing the dipstick is instantly negated the moment a used car drips a single drop of oil on the ground because it wasn't properly maintained and a 50 cent gasket wasn't replaced. This includes teslas, they have oil, they have oil filters, they still need servicing.

The loss of CAFE credits along with the direct and indirect impacts from cancelled subsidies are absolutely devastating to Tesla's fundamentals. Yet the stock price today is much higher than it was July 3rd, the day before the OBBB passed. And it's not like Tesla actually did anything since then to improve its outlook.

Astronomer appears to have a board of directors who take their role seriously. Tesla's board is Elon, family, and fanbois.

How long will it be until Elon does another poll about selling TSLA stock?

I do think we should be subsidizing, or incentivizing the charging infrastructure. The gas industry gets a ton of incentives and charging is a chicken and egg problem. Sure we will eventually have chargers everywhere, but right now, people in many areas shouldn't buy EVs because there aren't local chargers, and there aren't local chargers because people don't but EVs. Though this has improved dramatically, we are still a long ways away, especially for people who live in apartments/etc.

Yea, really soon you car will be able to drive coast to coast without a driver. You could sleep the entire time.

about 1%

my take is the Project 2025 people had *much* more juice in the admin than our guy

IKR we're heading to at best $1 EPS, where the stock price is the trailing P/E. Gordon Johnson's not looking so wrong any more.

I'm still a bit confused as to if their contracts to sell their credits ended the day the bill signed. It seems possible they could have been long-term agreements in which case maybe they'd still get paid for another year - or the opposite where ICE companies saw this happening in April and cancelled purchases even before the bill. Perhaps we will get more clarity on earnings.

Bullish for the stock!!

Certain provisions of the law, such as the electric vehicle tax credit, the café credit, and the new tax deductions for vehicles manufactured in the United States, are scheduled to take effect on September 30, 2025. In contrast, some federal income tax deductions are already in effect and available for immediate use, while some parts of the revised federal income tax regulations will be phased in over three steps, starting on January 1, 2026, and once a year thereafter until they are fully implemented. The true ramifications of Trump's legislative bill will remain somewhat unknown until at least the first quarter of 2026. By that time, we should have a comprehensive understanding of its impact, including how it alters the landscape for automotive manufacturers. Additionally, any pre-existing contracts or agreements between Tesla and other OEMs should no longer be binding, further clarifying the bill's screw on Tesla.   I am not a legislative analyst or expert on this area. I am just a simple PE and JD license holder from California. Some of my understanding of the law is based on rose-tinted glasses and how it helps my business.

I believe in practice the cafe credits are effectively immediate, maybe you could even say retroactively. As a car company you only get fined based on your *yearly* emissions average after you get a notice of non-compliance. Car companies without a longterm deal with Tesla would stop paying Tesla today if they could, though I'm unsure how the contracts between them are structured.

This scenario raises an interesting question. Consider a situation where Company X has preemptively paid Tesla for café credits at a favorable, discounted rate for the calendar year 2025. As a result, Tesla will still be able to report café-related revenue for the Q2 and Q3 reporting periods. This is why I believe we won't truly understand the state of Tesla's finances until Q1 2026, as by then we will have two quarters of reports without any income related to café credits. Fun times. If any company attempts to regain pre-paid café-related payments from Tesla, I imagine a scenario where Tesla will try to publicly litigate and embarrass any OEM that attempts to recover fees already paid.

Well it's possible they announce on earnings tomorrow, either on their own or if someone asks. A normal company would report this as a part of earnings guidance. And you'd think other manufacturers who no longer pay will gladly report on their earnings call that they no longer are paying. You are right it may be a bit of a puzzle, but I think people will get a good sense of it soon.

Their entire profit margin is wiped out.

Yes, but in this case the majority of the destruction was Elon's doing.

Wasn't that his promise back in '16, '17?

Exactly

At least part of why he spent all that money buying that election to exfiltrate enormous amounts of information about Americans to sell overseas and to Peter Theil

Why can’t we buy a BYD in the US? They seem like nice cars

In other words, president (and rapist) fucks something else

That represents a loss of more than a third of their 2024 profit. With the elimination of monetary sanctions, the enforcement of CAFE standards appears to be entirely undermined. It seems these standards, though still codified, are now merely a source of negative publicity. https://environmentalenergybrief.sidley.com/2025/07/08/congress-eliminates-corporate-average-fuel-economy-cafe-penalties-for-passenger-cars-and-light-trucks/?hl=en-US > In one of its many changes, the One Big Beautiful Bill Act, enacted on July 4, 2025, eliminated civil penalties for noncompliance with federal fuel economy standards. Specifically, Section 40006 of the Act amends the language of the Corporate Average Fuel Economy (CAFE) statute to reset the maximum civil penalty to $0.00. Although the statute and its implementing regulations otherwise remain in place, this amendment removes any civil penalties for producing passenger cars and light trucks that do not meet fuel economy requirements.

That's the thanks Elon gets for his $245 million campaign contribution to Donny.

Elon is his worst enemy. he thought he could save the government from spending this country bankrupt lol Elon is a useful idiot like the rest of you if you think Tesla EV are going to save the planet. Trump played 3d chess even Elon should of new that.

Closer to 900. But what’s 100billion

A tweet can be worth +/- 100 billion with Tesla

Yeah i always say it's guillotine or bust... Too much money to suffer