Trump's New ZEV Credit Regulations Aren't 'As Bad' For Elon Musk, Says Piper Sandler: 'Tesla Will Still Book Around $3 Billion…'
Piper Sandler analyst Alex Potter says President Donald Trump's new regulations over ZEV credits aren't "as bad as you think" for Elon Musk and Tesla Inc. (NASDAQ:TSLA).
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What Happened: In a new investor note released on Monday, Potter said the EV giant "received ~$3.5B in ‘free money’ last year, representing roughly 100% of FY24 free cash flow," before adding that Trump's new ZEV regulation has people worried about possible threats to the Tesla revenue stream.
"In short, we think the answer is no, at least not in 2025," the analyst said. However, Potter did concede that the Trump administration's recent commitment to rescind EV incentives could have an impact in the future.
"Tesla will still book around $3B in credits this year, followed by $2.3B in 2026," the analyst said before reiterating a $400 Price Target for Tesla, an upside of over 20%.
The note also hailed Robotaxi operations in Austin as well as the company's efforts to expand into other territories as a positive sign. "In our view, these favorable FSD-related developments are likely to overshadow any/all negative commentary arising from lower 2025/2026 estimates," the note said.
Why It Matters: The news comes as Trump's new regulations and the relaxation of CAFE or Corporate Average Fuel Economy norms could cast doubt over the company's ZEV revenue.
Tesla isn't the only company that risks losing the lucrative ZEV credit revenue, as Rivian Technologies Inc. (NASDAQ:RIVN) could lose a $325 million stream of cash influx into the company following Trump's new regulations.
The company also plans to expand the serviceable areas of its Robotaxi, with documents showing the EV giant's plans to enter Phoenix, as well as Musk stating that the Robotaxi could be available in the San Francisco Bay Area pending regulatory approval.
The administration has taken other steps to curb EV incentives, like axing the $7,500 EV credit, which will end on September 30, 2025. Elsewhere, the president has also indicated that he could hike auto tariffs again in a bid to boost domestic production.
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