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Tesla Banked $11 Billion By Selling Regulatory Credits. Now The Party's Over.
Tesla massive $11 billion revenue stream from the sale of carbon credits has propped up its earnings over the last decade. That will soon come to an end.
With the passage of the Big Beautiful Bill, the EV subsidies are going away, and with it, the monetary implications of automakers not being compliant with fleet-wide Corporate Average Fuel Economy (CAFE) requirements. The CAFE requirements have increased fairly steadily year-over-year since 2010 and sat at 49.2 miles per gallon in 2024, although this number includes EVs, changes based on vehicle size and is massively complicated by a variety of factors. Analysts at William Blair and Co. say that the loss of regulatory credit revenue will “result in a direct hit to profitability [for Tesla]” and anticipate demand to fall by around 75% in 2026 before completely disappearing in 2027.
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