Tesla is on the verge of losing a major source of income due to the administration of President Donald Trump, where Elon Musk was previously a prominent player. The enactment of Trump’s Big Beautiful Bill removed tax breaks for electric vehicles and the Corporate Average Fuel Economy (CAFE) standards. Automakers were obligated to adhere to these CAFE norms, and if they failed to do so, they could purchase carbon credits from companies like Tesla, which possessed an abundance. These credits turned into a billion-dollar revenue stream for Tesla, bolstering the company’s profits even as its sales dwindled.

InsideEVs provided insights on the ramifications of the Big Beautiful Bill for Tesla, highlighting that these credits accounted for $11.8 billion in revenue for Tesla throughout the last decade, aiding the company’s survival. “These regulatory credit sales are the reason that Tesla exists today,” stated Gordon Johnson, an analyst at GLJ Research, to InsideEVs.

Musk himself voiced a wish for the complete removal of all credits as recently as the previous year. Reuters indicated in July that this income segment was vital for Tesla’s financial standing, being the primary contributor to its profits in the first quarter of 2025. In the absence of the credits, Tesla would have disclosed a loss for Q1 of 2025. Approximately half of its operating income in Q2, which experienced a substantial 42 percent decrease compared to the previous year, originated from credits.

The credits, essentially free revenue for Tesla, are now on track to disappear altogether. Meanwhile, Tesla’s sales continue to fall worldwide amidst ongoing challenges with Musk. Furthermore, the termination of the $7,500 EV tax credit that assisted U.S. consumers in acquiring electric vehicles is significant.

In spite of potential obstacles, Musk advocated for the discontinuation of all EV subsidies as recently as last year. The billionaire Tesla CEO may hold a different viewpoint now, but it seems he is about to have his wish fulfilled.