Tesla Faces 75% Drop in Credit Revenue Amid Policy Shift
The electric vehicle maker has earned $10.6 billion in regulatory credit revenue since 2019, which has occasionally exceeded its net income. Analysts at William Blair expect the revenue from credits to drop 75% in 2026 and disappear completely by 2027, leading to a direct hit to profitability. Analyst Gordon Johnson told CNN that credit sales could dry up as early as the third quarter of this year if contracts are canceled early.
Tesla reported record sales declines in the past two quarters, driven by growing EV competition and political backlash involving CEO Elon Musk. The company is expected to report second-quarter results on Wednesday after a 55% year-over-year drop in first-quarter profits. Johnson warned that without regulatory credit sales, Tesla may resume reporting quarterly net losses.
This article first appeared on GuruFocus.
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