Tesla could take a hit if President Donald Trump’s “Big Beautiful Bill” becomes law.
Elon Musk’s AI company, however, may get a boost.
Many of Musk’s companies rely largely on federal regulations, subsidies, or contracts. That means the GOP’s federal spending bill, if signed into law, could directly impact his businesses.
While Musk has previously shared his disapproval of the bill, the billionaire ratcheted up his criticism this week.
“I’m sorry, but I just can’t stand it anymore,” Musk posted on X on Tuesday. “This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination.”
“Shame on those who voted for it: you know you did wrong,” he said in criticism aimed at the Republican politicians who voted in favor of the bill.
Musk’s sharp words for Trump’s bill come just days after he officially left his position as the de facto head of the DOGE office, ending his formal work at the White House. In recent weeks, both Trump and Musk have looked to assure the public that their relationship remains intact, even if they disagree on some issues.
White House press secretary Karoline Leavitt said in a briefing on Tuesday that the President already knew where Musk stood on the spending bill and that the Tesla CEO’s recent comments criticizing it wouldn’t change Trump’s stance.
The bill, which champions Trump’s agenda, includes cuts to Medicaid and the extension of the tax cuts that the president signed into law during his first term in 2017. It also includes administration priorities, including removing taxes on tips and overtime.
In regard to the companies Musk leads, the bill could have a mixed impact. While Tesla stands to potentially lose, companies like SpaceX and xAI may benefit from the president’s massive spending bill.
Tesla’s credits threatened
The bill, as written, makes big changes to the Biden-era EV tax credits, which aim to encourage more Americans to buy electric vehicles. It would largely phase out the clean vehicle credit, which lets people buying a new EV claim up to $7,500, and up to $4,000 for used-EVs.
Electric vehicles would no longer qualify for the tax credit if the automaker sold more than 200,000 previously qualifying EVs between December 31, 2009, and December 31, 2025, if the bill became law. Tesla delivered more than 336,000 vehicles in the first quarter of 2025 alone.
Musk has previously said that eliminating the EV tax credit would devastate Tesla’s competitors and impact the automaker as well. However, he said that the move would probably help Tesla in the long term.
Others don’t seem sold on Musk’s rationale.
Seth Goldstein, an equity strategist at Morningstar, told BI that the expedited elimination of the EV tax credit will be “the biggest area that could impact Tesla.”
“Consumers have increased long range EV choices at similar price points as Tesla,” Goldstein said. “It’s on Tesla to make the case for consumers to even slightly pay up today versus some other EVs.”
Goldstein said that tax credit elimination could lead to a decrease in sales volume, which the automaker has already been struggling with.
JPMorgan analyst Ryan Brinkman wrote in an investor note that Trump’s “Big Beautiful Bill,” combined with other proposed legislation, including ending the California Air Resources Board Program, threatens over half of Tesla’s 2025 profits.
Brinkman wrote in the note that the $7,500 consumer tax made up 19% of Tesla’s 2024 earnings before interest and tax, and could result in a potential $1.2 billion headwind. He added that the automaker could face a $2 billion headwind from the removal of CARB ZEV credit sales, which encourage the sales of zero-emission vehicles.
Tesla is betting big on AI and robotics as it pushes to reach full autonomy, in part through its upcoming robotaxi service, efforts that Musk has said are key to growing the company’s valuation. However, Brinkman said that any material benefit from Tesla’s autonomous robotaxi business is years away, while the headwind from EV subsidy removal would likely hit the automaker in 2025 and 2026.
“We expect estimates to come down as the impact of Trump Administration EV subsidy removal becomes clearer,” Brinkman wrote.
Goldstein said that the removal of the tax credit could “accelerate” Tesla’s transition to an AI and robotics company.
It’s also possible that the expiration of the EV tax credit on Tesla vehicles could spur some short-term demand from buyers looking to purchase one of the company’s EVs before the window closes.
Trump’s spending bill wouldn’t only change existing taxes and fees. Under its current language, it would also impose a $250 yearly fee for EV drivers through the Federal Highway Administration, and a $100 yearly fee for hybrid vehicles.
As written, the bill also scraps a loan program that Tesla utilized in 2010, long before Trump even entered the political scene.
The spending bill also threatens Tesla’s energy business, which Musk has said is “growing like wildfire,” by ending energy tax credits. The automaker’s energy generation and storage business, which includes Tesla’s Megapack and Powerwall battery systems, brought in $2.73 billion in the first quarter of 2025, a 67% increase from the year prior.
Musk shared a post on X from the official Tesla Energy account that said, “abruptly ending the energy tax credits would threaten America’s energy independence and the reliability of our grid.”
Tesla Energy also added that it urges the Senate to enact legislation with a “sensible wind down” to continue speedy deployment that supports AI and domestic manufacturing.
“This bill would hurt Tesla around the energy tax credits going away,” Dan Ives, a Wedbush analyst and a noted Tesla bull, told BI.
xAI may benefit from AI regulation changes
Trump’s spending bill, if signed into law, may also help his AI company, xAI.
One section of the bill prohibits states and local governments from regulating AI for the next decade in an effort to remove legal barriers related to deploying and adopting AI.
That could allow Musk to develop and advance xAI with less red tape on the regulatory side to slow the company down.
The bill also allocated funds toward modernizing the federal IT system with AI and improving the cybersecurity of its systems. With the government setting money aside to improve its systems, xAI, one of the companies at the forefront of the AI race, could be contracted to power the modernization efforts.
Read the full article here
