Elon Musk has forged a notable bond with former President Donald Trump, yet the Trump administration’s recent efforts to dismantle electric vehicle (EV) incentives raise concerns for many Tesla stakeholders. Analysts and investors are divided regarding the potential implications of these policy changes for the leading U.S. electric vehicle manufacturer.
Mixed Reactions from Analysts
While some analysts express skepticism about Tesla’s future prospects due to this loss of favorable policies, others are optimistic. A senior analyst at Wedbush, Dan Morgan, posits that Musk’s proximity to the White House may provide a regulatory framework favorable to Tesla’s goals in autonomous driving and robotics.
“The narrative for Tesla is overwhelmingly centered around advancements in autonomous technology,” Morgan remarked. He believes that the Trump administration’s regulatory landscape could significantly benefit the company, positioning it for future success.
Concerns Among Bearish Investors
Yet, bearish sentiments loom large among critics like Gerber Kawasaki’s CEO, who has reduced his position in Tesla to approximately 280,000 shares. He argues that Tesla’s autonomous technology still faces substantial obstacles and is critical of Musk’s controversial public standing, suggesting it negatively impacts vehicle sales.
“I find it difficult to see a clear trajectory for Tesla moving forward, especially with the current failures in autonomy,” he asserted. Moreover, he stresses that many consumers are reluctant to buy vehicles amidst Musk’s polarizing figure.
Challenges in Sales
Recent data indicates that Tesla’s sales in European markets have notably declined. For instance, German sales plummeted by 60% in early 2025 compared to the same period last year. Additionally, Trump’s administration has taken steps to revoke policies that facilitated Tesla’s success, such as potential removal of the longstanding $7,500 tax credit for EV purchases.
“If the federal tax credit is eliminated, each Tesla will effectively see a price increase of $7,500 overnight,” warned GLJ Research’s Gordon Johnson. He emphasized that this change could exacerbate affordability challenges for consumers as many cannot absorb such sudden price hikes.
Impact of Regulatory Landscape
Tesla has historically benefitted from selling government-mandated credits to other manufacturers, raking in over $2.7 billion in 2024 from these transactions alone. Johnson notes that, without these credits, Tesla’s free cash flow could turn negative.
Moreover, Trump issued an executive order halting the allocation of funds intended for EV charging infrastructure, an area where Tesla has previously thrived, receiving about $31 million from the National Electric Vehicle Infrastructure program.
Long-Term Prospects
Despite the challenging landscape, some analysts maintain a bullish outlook. They speculate that the absence of tax credits and regulatory benefits might actually strengthen Tesla’s position by eliminating competitors that lack the resources to remain viable.
“Tesla stands as the only major EV manufacturer turning a profit,” narrative continues from Stifel’s Managing Director, who believes the company can leverage its financial advantages to incentivize sales and manage costs effectively.
As stakeholders grapple with a changing market, the ongoing interplay between Musk’s relationship with Trump and Tesla’s operational strategies will be crucial in shaping the electric vehicle landscape in the years to come.
