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Time of India
23-07-2025
- Automotive
- Time of India
Tesla's easy money from regulatory credits set to dry up amid weakening sales
A key driver of Tesla's profit is disappearing fast as the U.S. government changes policies on an environmental asset known as regulatory credits. Investors are likely to have a number of questions for Chief Executive Elon Musk when Tesla reports second-quarter results on Wednesday. Among them are how fast the EV maker can turn a trial robotaxi program into a money-making business, how to avoid a decline in sales for the second year in a row, and Musk's possible political plans. Less sexy, perhaps, is the issue of regulatory credits, which are bought by traditional automakers from electric-vehicle companies to make up for the tailpipe pollution from their gasoline-powered vehicles. But this income segment is crucial for Tesla's finances, having been the main driver of its profit in the first three months of the year. Without the income from those credits, sold to internal combustion engine automakers, Tesla would have reported a first-quarter loss, and Musk may be pressed to say how long he thinks Tesla will be able to sell credits. The U.S. government incentivized zero-emission vehicle production by giving credits to EV makers while imposing hefty penalties on combustion engine vehicle manufacturers that fail to meet emission standards. The traditional automakers can avoid the fines by purchasing credits from companies like Tesla. Recent legislation passed under the U.S. President Donald Trump, however, is set to eliminate fines for automakers that fail to meet National Highway Traffic Safety Administration's Corporate Average Fuel Economy standards - which underpin much of the demand for these regulatory credits. "They are making conventional ICE vehicles more competitive while making EVs less competitive," said Batt Odgerel, a director at the Energy Policy Research Foundation, referring to Congress, Trump and the federal government. Tesla risks losing revenue from the credits as well as market share, he added. The future of two other sources of credits - from the U.S. Environmental Protection Agency and California's zero-emission vehicle program - is uncertain, with proposed rule changes and political and legal challenges. "That is certainly likely to be a big loss of revenue for automakers" that were selling credits, added Chris Harto, a senior policy analyst at Consumer Reports. Tesla has reported more such sales than anyone else in the automotive sector. Faster decline than expected One question for Tesla is how fast the credit sales are falling and whether the EPA and California transactions are holding up for now. Other credit producers include smaller EV players Rivian and Lucid. Analysts at William Blair calculate that about three-quarters of Tesla's credit revenue comes from CAFE standards. Within days of the new law, they slashed estimates for Tesla's 2025 credit revenue by nearly 40 per cent to about $1.5 billion. They expect it to plummet to $595 million next year, before being wiped out in 2027. That is a faster decline than seen by many on Wall Street. Tesla's revenue from credit sales will fall 21 per cent this year to $2.17 billion and fall consistently in the coming years, according to 14 analysts polled by Visible Alpha this month. "The elimination of the corporate average fuel economy (CAFE) fines requires a reset in expectations," the William Blair analysts said in their note earlier this month. Revenue from credits was always expected to dwindle as traditional automakers ramped up production of zero- or low-emission cars, but not so fast. Tesla has acknowledged its financials would be "harmed" if demand and prices of credits dropped. It did not respond to a request for comment. The credits, which have virtually no cost to produce, were instrumental to keeping Tesla profitable several years ago. While surging Model Y demand once pushed Tesla's profit well above regulatory credit income, recent sales declines and aggressive price incentives have meant regulatory credits are once again a key support for profit. Tesla's loss is a win for internal combustion engine automakers such as General Motors, Ford and Honda, and it comes on top of a second win - the early end of a $7,500 U.S. tax credit for EVs, which now will happen at the end of September.
Yahoo
18-07-2025
- Business
- Yahoo
Gas prices in Canada hold flat this week as experts ask, 'Where's the spike?'
Canada's gas price average held steady at $1.444 per litre of regular fuel over the past week, according to data from Kalibrate. That's nearly a 14 per cent discount year over year. North Bay, Ont. and Gatineau, Que. were the most volatile markets this week, with prices falling 8.6 cents per litre in the former, and rising 5.4 cents per litre in the latter. Gas prices were a big factor in this week's inflation reading from Statistics Canada. The federal data agency said the annualized inflation rate rose to 1.9 per cent in June from 1.7 per cent in May. "Headline inflation grew at a faster pace, as gasoline prices fell to a lesser extent in June (-13.4 per cent) than in May (-15.5 per cent)," StatCan wrote on Tuesday. "Year over year, the CPI (consumer price index) excluding energy (+2.7 per cent) remained higher than the CPI in June, partly due to the removal of consumer carbon pricing in April." While the elimination of the consumer-facing carbon tax has cooled typically hot summer gas prices in Canada, analysts in the United States say the summer driving season has been unusually cheap south of the border as well. Researchers at the Energy Policy Research Foundation are asking, "Where's the spike?" "U.S. gasoline prices generally rise substantially with the onset of the summer driving season. However, except for California and the other West Coast states, prices have been generally flat during the summer of 2025, a distinct deviation from historical trends," wrote researchers at the Washington, D.C.-based non-profit. "This is even more surprising given that in the current context demand has not slackened. Vehicle miles traveled continue their upward trend, albeit with improving efficiency, and there are several risk factors that could lead to tight supplies." Follow Yahoo Finance Canada for more weekly gas price updates. Scroll below to find your nearest city. (All figures in CAD cents) Location July 10 July 17 Price Change Canada Average (V) 144.4 144.4 0 WHITEHORSE 161.9 161.9 0 VANCOUVER* 167 165.9 -1.1 VICTORIA 159 158.6 -0.4 PRINCE GEORGE 145.6 145.6 0 KAMLOOPS 145.9 145.8 -0.1 KELOWNA 145.7 145.2 -0.5 FORT ST. JOHN 138.4 133.4 -5 ABBOTSFORD 149.7 156.7 7 YELLOWKNIFE 144.7 144.7 0 CALGARY* 133.2 136.7 3.5 RED DEER 130.3 133.8 3.5 EDMONTON 130.2 133.3 3.1 LETHBRIDGE 131.1 131.3 0.2 LLOYDMINSTER 126.5 125.8 -0.7 GRANDE PRAIRIE 130.7 128.9 -1.8 REGINA* 131.8 131.8 0 SASKATOON 134.9 135.3 0.4 PRINCE ALBERT 130.2 128.6 -1.6 MOOSE JAW 135.6 135.6 0 WINNIPEG * 134.9 134.2 -0.7 BRANDON 130.9 128.7 -2.2 CITY OF TORONTO* 137.6 136.6 -1 BRAMPTON 137.4 136.1 -1.3 ETOBICOKE 136.9 136.4 -0.5 MISSISSAUGA 136.4 135.4 -1 NORTH YORK 137.9 136.9 -1 SCARBOROUGH 137.4 136.2 -1.2 VAUGHAN/MARKHAM 137.6 136.3 -1.3 OTTAWA 136 135.6 -0.4 KINGSTON 124.3 128.9 4.6 PETERBOROUGH 126.8 124.9 -1.9 WINDSOR 136.3 135.1 -1.2 LONDON 137.1 135.8 -1.3 SUDBURY 134.4 127 -7.4 SAULT STE MARIE 128.1 127.8 -0.3 THUNDER BAY 131.4 137.2 5.8 NORTH BAY 140.2 131.6 -8.6 TIMMINS 138.8 138.7 -0.1 HAMILTON 135.5 133.8 -1.7 ST. CATHARINES 132.3 133.1 0.8 BARRIE 136.9 135.7 -1.2 BRANTFORD 134.3 134.8 0.5 GUELPH 135.8 135.8 0 KITCHENER 136 135.2 -0.8 OSHAWA 137.1 135.4 -1.7 SARNIA 125.3 129.9 4.6 MONTRÉAL* 158.4 157.6 -0.8 QUÉBEC 150 151.9 1.9 SHERBROOKE 149.5 150 0.5 GASPÉ 157.4 157.4 0 CHICOUTIMI 133.3 138.5 5.2 RIMOUSKI 151.4 151.4 0 TROIS RIVIÈRES 154.4 154.4 0 DRUMMONDVILLE 148.9 148.4 -0.5 VAL D'OR 156.7 156.7 0 GATINEAU 134.5 139.9 5.4 SAINT JOHN* 137.8 139.2 1.4 FREDERICTON 138.3 141 2.7 MONCTON 138.5 141.4 2.9 BATHURST 138.3 138.3 0 EDMUNDSTON 138.1 140.2 2.1 MIRAMICHI 139.6 142.1 2.5 CAMPBELLTON 139.7 142.5 2.8 SUSSEX 138.1 140 1.9 WOODSTOCK 139.6 142.4 2.8 HALIFAX* 140.1 143.6 3.5 SYDNEY 142.3 145.5 3.2 YARMOUTH 141.1 144.6 3.5 TRURO 141.3 144.7 3.4 KENTVILLE 140.7 144.2 3.5 NEW GLASGOW 141.3 144.7 3.4 CHARLOTTETOWN* 145.6 148.5 2.9 ST JOHNS* 147.2 149.8 2.6 GANDER 149.4 153.5 4.1 LABRADOR CITY 154.4 156.9 2.5 CORNER BROOK 148.2 150.8 2.6 GRAND FALLS 148.5 153.5 5 SOURCE: KALIBRATE • All figures in CAD cents (*) Denotes markets used in Volume Weighted Canada Average Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist. Download the Yahoo Finance app, available for Apple and Android. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
