Big Beautiful Bill stops Tesla EV credits – 2 billion less profit?

With the Big Beautiful Bill, Tesla faces a major setback: The abolition of the EV credits could take away around 2 billion US dollars in net profit from the company annually. You will learn how the originally state-anchored ZEV credit system works, why the credits are so valuable, and what consequences the new federal law will have for Tesla's financial figures and the US e-mobility transition.

How the ZEV credit system works

The ZEV program (Zero-Emission Vehicle) forces car manufacturers in states like California to sell a certain percentage of emission-free vehicles.

Deficit: If not enough EVs are sold, a high penalty threatens (e.g., $5,000 per missing credit).
Surplus: Tesla, as a pure e-company, generates credits in excess and sells them to legacy manufacturers.
Profit source: In 2024, Tesla generated 2.76 billion $ solely from the sale of these credits.

Billion-dollar impact due to the Big Beautiful Bill

The planned federal draft abolishes the financial penalties for non-compliance – thereby stripping Tesla's EV credits of any value. Consequences:

Without 595 million $ from the credits, Tesla would have recorded a loss of 189 million $ instead of a profit of 409 million $ in Q1 2025.
A JPMorgan analyst forecasts a decline in annual profit by over 50 %, which is about 2 billion $ less earnings.

Why the program exists at all

Although Tesla is directly affected, the ZEV program pursues a societal goal:

Promoting innovation: Legacy manufacturers are thus incentivized to accelerate their own EV programs.
Climate protection: The higher the fines, the faster the share of emission-free vehicles in traffic increases.

If the penalty payment is abolished, the EV market in the USA could slow down again and fewer models might be available.

Consequences for Tesla and the US market

Tesla must now:

Reduce costs to compensate for the lost credit income.
Adjust US strategy, such as through higher vehicle prices or new service revenue sources.
Intensify lobbying to weaken the law in its final version.

For US buyers, this means: possibly less competitive pressure and higher prices from traditional manufacturers – and thus a slower transition to e-mobility.

Conclusion
The Big Beautiful Bill questions Tesla's lucrative EV credits and endangers around $2 billion in annual profit. This change could slow down the transition to electromobility in the USA unless alternative incentives or pricing strategies are established.