Elon Musk's prolific exit from the Trump administration does not seem to have had a discernibly positive impact on Tesla's sales, which continue to contend with brand damage and politically motivated boycotts.
While Donald Trump saw his net favorability rating stay mostly flat in the first half of June, Elon Musk lost another 3 points to a new low, and seems headed towards minus 20%. pic.twitter.com/d25iktifXx
— funwithnumberz (@funwithnumberz) June 16, 2025
Elon Musk officially quit DOGE on the 30th of May via a fairly amicable press conference in the White House's Oval Office. Since then, however, Musk's favorability rating has continued to tank while that of Trump has remained stable.
Of course, the public-facing, albeit brief, feud between Elon Musk and Trump is likely to have acted as a major contributing factor to this evolving disparity, where the former bandied charges of collusion with Epstein while the latter retaliated by threatening to overturn SpaceX's government contracts.
Given Elon Musk's tanking poll numbers, it is hardly a surprise that Tesla continues to struggle to meet consensus delivery estimates. According to Wells Fargo analyst Colin Langan, Tesla "will need a >50% m/m jump in deliveries to meet consensus deliveries of 411K."
According to Langan, Tesla does not currently have "leverage on deliveries," which is likely to depress its margins. Moreover, the analyst cites the recent US Senate ruling to end the California Air Resources Board (CARB) waiver to suggest that it would likely spell the end of the Zero-Emissions Vehicle (ZEV) credits. The waiver allowed California to set stricter vehicle emissions standards. Once signed by the president, the ZEV credits scheme will end and automakers will no longer be compelled to buy these emissions credits from Tesla.
Langan calculates that regulatory credits constituted a whopping 32 percent of Tesla's 2024 EBIT (earnings before interest and taxes). What's more, ZEV credits currently amount to around 50 percent of this proverbial pie for Tesla. This suggests a ~16 percent EBIT hit for Tesla.
Additionally, the Trump administration can further dampen the demand for GHG (green house gases) credits by easing environmental rules.
Meanwhile, the Wells Fargo analyst expects Tesla to deliver just 343,000 vehicles in Q2. The EV giant's deliveries so far this quarter are tracking at around -23 percent year-over-year.
The analyst goes on to note:
"New Model Y appears weak given inventory building & promotions. There is also no update on the affordable model, the only driver of 2H volumes."
Langan combines these headwinds, including Tesla's EBIT crash of over 60 percent year-over-year in 2025, with Tesla's 2025 CapEx guidance of over $11 billion to suggest that the EV giant's free cash flow (FCF) might turn negative for the year, to the tune of -$1.9 billion.
Interestingly, Langan expects Tesla to incur a $266 million one-time gain on its Bitcoin holdings in Q2.
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