The Zacks Analyst Blog Highlights Tesla, General Motors, Ford and Stellantis
Chicago, IL – August 5, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Tesla TSLA, General Motors GM, Ford F and Stellantis STLA.
Here are highlights from Monday's Analyst Blog:
Tesla's Regulatory Credit Cash Cow Is Fading Fast: Why It Matters
For years, Tesla has made big money not just from selling electric vehicles (EVs), but also from selling regulatory credits to other automakers. These credits have aided Tesla's overall margins, even when car sales were under pressure. But that extra boost is shrinking fast now. And if the trend continues, it could just worsen things for the company.
Tesla has been selling billions of dollars' worth of regulatory credits to legacy automakers who needed them to offset their gas-guzzling vehicle fleets and avoid fines. The revenues—more than $10.6 billion since 2019—have been a critical boost to Tesla's profits, especially during times when the core business struggled to stay in the black.
In Q2'25, Tesla reported $439 million in regulatory credit revenues. On the surface, that still looks solid. But the trend tells a different story. Credit sales have fallen sharply from $890 million in Q2'24, marking a nearly 50% drop in just a year. And it's not a blip—it's a steady slide. From $739 million in Q3'24 to $692 million in Q4'24, then $595 million in Q1'25—and now $439 million.
Policy Shifts and EV Competition Add Pressure
Last month, President Trump's tax and spending bill officially scrapped the penalties for automakers failing to meet Corporate Average Fuel Economy (CAFE) standards. That's a game-changer. Automakers who previously bought credits from Tesla to avoid hefty fines—over $1.1 billion worth from 2011 to 2020—now have no reason to do so. The penalty is effectively gone.
That removes the key incentive behind Tesla's regulatory credit windfall. And it couldn't come at a worse time. Tesla is already facing a slump in deliveries and profits. The company recently posted two straight quarters of delivery declines. Without credit sales to somewhat plug the gap, Tesla's core business will face more pressure.
Some automakers may still have long-term credit purchase agreements with Tesla, but those contracts may be renegotiated—or even canceled—early. In fact, the credit revenues could disappear by next year.
And it's not just the policy shift. Many legacy automakers like General Motors, Ford and Stellantis are also shifting their gears to electric. As they scale up their EV output and reduce emissions, they need fewer regulatory credits.
A Fading Lifeline Tesla Can't Ignore
While headlines are busy tracking CEO Elon Musk's political battles or the loss of $7,500 EV buyer tax credits, this regulatory credit risk of Tesla has not gotten much attention. But the risk is real—and growing.
Regulatory credits have quietly propped up Tesla's profits for years. But the safety net could be vanishing. Unless Tesla can make up for the loss with stronger sales, tighter cost controls or big wins in robotaxis, the road ahead could get bumpier.
The Zacks Rundown for Tesla
Shares of Tesla have lost around 20% over the past six months compared with the industry's decline of 17%. Meanwhile, shares of Ford and General Motors are up 8% and 10%, respectively, while Stellantis is down 32% during the same timeframe.
From a valuation standpoint, TSLA trades at a forward price-to-sales ratio of 9.5, way above the industry. It carries a Value Score of D. Meanwhile, General Motors trades at a forward sales multiple of 0.28, Ford at 0.27 and Stellantis at 0.14.
Tesla stock currently carries a Zacks Rank #4 (Sell).
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Ford Motor Company (F): Free Stock Analysis Report
General Motors Company (GM): Free Stock Analysis Report
Tesla, Inc. (TSLA): Free Stock Analysis Report
Stellantis N.V. (STLA): Free Stock Analysis Report
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