Elon Musk's Tesla faces $3bn hit from Trump's ‘big, beautiful bill'

Telegraph

2 days ago

Tesla is facing a $3bn (£2.2bn) hit from Donald Trump's tax and spending bill, highlighting a potential reason why Elon Musk has vowed to 'kill' the legislation.
Buried in the US president's 1,000-page bill are plans to eliminate a $7,500 tax incentive for electric vehicle (EV) buyers and ban a similar scheme in California.
Wall Street analysts said axing the tax break for drivers would cost Tesla about $1.2bn, while the Californian ban threatens a further $2bn profit hit.
The president's 'big, beautiful bill' has prompted a furious reaction from Mr Musk, who left his role as a White House cost-cutting tsar last week. The world's richest man has since called the tax and spending legislation a 'disgusting abomination' and called on US politicians to 'kill the bill'.
Ryan Brinkman, a JP Morgan analyst, wrote in a research note that 'Tesla appears to have the most to lose from the shifting regulatory backdrop, perhaps to the tune of $3.2bn'. He expects the measures to cut Tesla's profits in half this year.
Mr Musk has been personally lobbying US senators to block the passage of the bill, which is expected to add $2.4 trillion to the US deficit. According to NBC, he called Mike Johnson, the Republican US House speaker, in an effort to save the green tax credit, while he has also amplified the views of US senators who oppose the legislation on X.
The billionaire has so far presented his opposition to the bill as a matter of principle, arguing that it undermines the work he did at the department for government efficiency (Doge) to slash government spending in an effort to lower taxes and borrowing.
In a post on X, Mr Musk said the bill 'defeats all the cost savings achieved by the Doge team at great personal cost and risk'. In another, he labelled the planned law the 'Debt Slavery Bill'.
However, the JP Morgan research highlights the potential personal cost to Mr Musk from the legislation. Much of his wealth is derived from Tesla, which has already suffered as a result of his association with Mr Trump. Sales have slumped in Europe amid a political boycott of the electric vehicles.
Mr Musk's net worth has fallen by $64bn so far this year, according to Bloomberg, though he still commands an estimated $368bn fortune.
The entrepreneur has sought to rally Republican voters to lobby against the bill and threatened to 'fire all politicians who betrayed the American people' in November's mid-term elections. Mr Musk was the largest political donor in the US last year, giving $290m to encourage voters to elect Mr Trump and other Republicans.
Mr Musk had previously defended Mr Trump's vision of cutting electric vehicle subsidies, insisting the changes would 'only help Tesla' by hurting its rivals. 'I think we should get rid of all credits,' he said last year.
However, since quitting the White House, Tesla and Mr Musk have taken aim at many of the proposals in Mr Trump's planned bill. Last week, Tesla Energy, its solar and battery storage business, said: 'Ending energy tax credits would threaten America's energy independence and the reliability of our grid.'
The rift has angered Mr Trump, Axios reported. The website said Mr Johnson told colleagues Mr Trump was 'pissed off' with the Tesla boss and told reporters he was 'not delighted that Elon did a 180'.
The changes to EV credits are expected to hit sales of battery-powered cars across the US. Dan Ives, a technology analyst with Wedbush Securities, said the changes would 'hurt EV demand by 10pc across the industry'.
A survey from Insurify, meanwhile, found 45pc of EV buyers said they would not have bought a new car without the $7,500 incentive. It found 36pc of Tesla buyers would have not made a purchase without the benefit.
Mr Trump's tax and spending bill passed the House of Representatives by a narrow margin and is now before the Senate.