Musk vs. Trump’s Economic Agenda: $250 Million in Political Spending, Billions in Tesla Losses

TradingKey - From ally to opponent — Elon Musk’s investment in Donald Trump’s political campaign appears to have gone south. Tesla shares and vehicle deliveries have plummeted as tensions between Musk and the Trump administration escalate.

During the 2024 U.S. presidential election, Musk spent over $250 million supporting Republican candidate Donald Trump, becoming a key backer of his return to the White House.

Despite knowing Trump’s long-standing skepticism toward new energy industries, Musk still chose to support him — aiming for future advantages for Tesla over its competitors. BBC reported that Musk’s backing was also motivated by a desire to reduce regulatory scrutiny on his tech ventures.

However, over recent months, the relationship has soured — with Musk openly criticizing Trump’s tax bill that includes cuts to EV subsidies, and even calling for the formation of a new political party.

Tesla Faces Billions in Potential Losses

Under Trump’s recently passed “Big Beautiful Bill,” the U.S. government plans to eliminate the $7,500 tax credit for purchasing or leasing electric vehicles and the $4,000 credit for used EVs.

These provisions are set to expire on September 30, 2025 .

JPMorgan estimates that Tesla will face an annual revenue loss of $1.2 billion once these credits are removed — equivalent to 17% of its projected 2024 profits.

The bill also reduces incentives under the Corporate Average Fuel Economy (CAFE) standards, which reward automakers that meet emissions targets with regulatory credits. These credits have been a major profit driver for EV companies.

In Q1 2025, Tesla reported $595 million in regulatory credit sales, up 35% year-over-year — surpassing its net income of $409 million. In other words, without this revenue, Tesla would have recorded a loss during the quarter.

According to Financial Times, three-quarters of Tesla’s regulatory credit revenue comes from the U.S., with the remainder largely derived from similar programs in Europe and Asia.

Trump’s tax bill — now passed by both chambers of Congress — means Tesla may partially or fully lose this critical source of income. While some revenue is protected under existing contracts, risks remain if those agreements include clauses related to force majeure or legal changes.

Tesla Fights Back — Regulatory Credits Abroad to the Rescue

Tesla is not standing still. The company has actively sought alternative sources of regulatory credit revenue overseas.

Recently, it signed an EU emissions agreement with Stellantis, Ford, Mazda, Subaru, and Toyota.

UBS analysts estimate that monetizing Tesla’s full carbon credit position could generate over €1 billion in revenue.

A Tesla executive described the Trump tax bill as a terrible policy, arguing that it harms Tesla across multiple fronts — including tariffs, the $7,500 consumer credit, manufacturing tax credits, charging credits and solar residential credits.

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