Tesla Faces Profit Challenges Under Trump Administration

Elon Musk spent more than a quarter of a billion dollars, $270 million to be exact, on Donald Trump’s election campaign to help Donald Trump get into office, likely believing that a Trump administration would help his companies, including Tesla and SpaceX.

Since the election, Musk’s personal wealth has surged by more than $200 billion, driven primarily by the rising value of Tesla’s stock. However, some analysts predict that Tesla will face significant challenges under Trump’s administration, with profits potentially dropping by up to 40% this year.

According to Ryan Brinkman, an analyst at JP Morgan, the anticipated elimination of the $7,500 federal tax credit for electric vehicles could pose a substantial threat to Tesla’s earnings. 

He noted that Tesla’s global sales in 2024 fell short of expectations, totaling 1,789,226 vehicles, a slight decline compared to 2023. This marks the first time in over a decade that Tesla has not achieved annual sales growth.

Brinkman stated, "We believe the slowdown in deliveries, even before the potential removal of subsidies, could refocus investors on the decline in deliveries, revenues, overall profits, estimates for EBITDA, earnings per share, and free cash flow across all periods."

He added that Tesla might be the most affected by changes in regulatory policies, potentially seeing its profits drop by approximately $3.2 billion, or 40%. 

He also suggested that electric vehicle sales could decline in nearly every geographical market during Trump’s presidency, posing significant challenges for Tesla in its pursuit of dominance in the global automotive industry.

The report also highlighted a decrease in Tesla’s global market share for electric vehicle sales, dropping from around 15.5% in 2023 to 13.7% in 2024. This reflects the growing pressures on the company amidst shifting regulatory and market dynamics.