In the eyes of some, Elon Musk has gained the title of “first buddy” of President Donald Trump. However, the Trump administration’s efforts to roll back numerous EV-friendly policies have prompted concerns from Tesla investors, analysts, and EV experts regarding potential negative impacts on Tesla, the leading U.S. EV manufacturer by a large margin.
Conversely, more optimistic analysts argue that Musk’s connection to the White House could spell positive developments for Tesla, with its future anchored in autonomous driving and robotics.
“Tesla’s narrative going forward revolves around autonomy and robotics; we’ve never classified it solely as an automobile company,” stated Dan Ives, a senior analyst at Wedbush.
“The presence of Trump in office substantially alters the regulatory landscape for autonomous vehicles,” he continued.
“I believe a federal framework will emerge, reinforcing our perspective that Musk’s alliance with Trump is a strategic move of historical significance,” he remarked.
However, more skeptical analysts and investors maintain a different outlook.
Ross Gerber, CEO of Gerber Kawasaki, is among them. He shared with CNBC that his firm possesses approximately 280,000 Tesla shares, which is just over half the quantity he held at the peak of the stock’s value.
“I struggle to envision a clear path for Tesla moving forward, as autonomy has not yet proven itself effective,” Gerber conveyed. “I literally take my Cybertruck, and I can’t drive for more than five minutes without needing to disengage. Meanwhile, Waymos are navigating around me effortlessly. We’re simply not at that stage yet, and I doubt the hardware will bridge the gap, while vehicle sales are declining.”
According to Gerber, the lack of vehicle sales can be attributed to Musk’s support of Trump and his engagement in the White House affairs.
“Elon is arguably one of the most polarizing figures globally,” he asserted. “Many people harbor negative feelings toward Elon, and they express that sentiment through Tesla’s performance. It’s truly unfortunate.”
Data indicates that Tesla sales have plummeted in several European markets, with a staggering 60% drop in Germany during the first two months of 2025 compared to the same period in the previous year.
In the meantime, the Trump administration is targeting policies that have been advantageous for EV manufacturers like Tesla. An executive order issued on January 20 aims at “removing unfair subsidies and other misguided government-imposed market distortions that favor EVs.”
Currently, at least one variant of every Tesla model qualifies for federal credits, more than any other automaker.
“If President Trump eliminates the $7,500 credit, the price of every Tesla vehicle would effectively rise by $7,500,” said Gordon Johnson from GLJ Research. “There’s no way to sugarcoat that. This poses a significant downside, especially considering around 60% of the U.S. population cannot afford an unexpected $600 expense.”
Tesla has profited significantly by selling government-mandated credits to other automakers.
At both federal and state levels, regulations require automakers to sell a designated percentage of low-emission or zero-emission vehicles. If they fail to meet these quotas, they must purchase credits from manufacturers who do. Since Tesla exclusively produces EVs, it has accumulated what Gerber refers to as “free money” from selling these credits to traditional automakers. In 2024 alone, Tesla generated over $2.7 billion from these credits. Although it’s a minor portion of Tesla’s $97.7 billion revenue for that year, Johnson pointed out that much of the company’s free cash flow derives from these credits.
“Our analysis indicates that, over Tesla’s lifespan, its free cash flow would be negative if you exclude these EV credits,” Johnson noted.
Trump’s January executive order also requested a pause on the distribution of funds allocated for electric vehicle charging.
Tesla has received approximately $31 million from the National Electric Vehicle Infrastructure program, a federal initiative established during the Biden administration to support the expansion of charging infrastructure across the U.S. Tesla accounted for about 6% of all funds allocated by this program.
Supporters argue that the potential removal of EV tax credits, regulatory credits, and charging funds might not significantly harm Tesla or even benefit the company by eliminating rivals incapable of profitably producing EVs.
“Tesla is presently the only automaker achieving profitability,” emphasized Stephen Gengaro, Managing Director at Stifel. “They possess the capability to offer sales incentives and reduce costs.”
