ToplineTesla reported third-quarter earnings Wednesday that fell short of economists’ expectations, the first of the world’s largest firms to post third-quarter earnings, following a historic rise in quarterly deliveries in the lead-up to electric vehicle tax credits expiring. The automaker earlier reported a record-setting number of vehicle deliveries through the quarter.Getty ImagesKey FactsTesla reported $28.09 billion in revenues, well above Wall Street’s forecasts of $26.5 billion, according to FactSet ...

Market Trends - BNP Paribas predicts Rivian and Lucid shares will rise due to potential benefits from President Trump's tax and spending bill ending electric vehicle tax credits [1] Policy Impact - The potential elimination of electric vehicle tax credits under President Trump's bill is expected to positively impact Rivian and Lucid [1]

Core Insights - Tesla's stock has been volatile and controversial, with a market cap around $1 trillion, driven by expectations of increased electric vehicle sales and a potential robotaxi business [1] - Sales growth is struggling in key markets, and CEO Elon Musk has been in the news for negative reasons [1] Tax Credit Implications - A new bill backed by President Trump proposes eliminating federal tax credits for electric vehicles, which currently range from $4,000 to $7,500 [2] - Over 90% of Tesla's sales come from the Model 3 and Model Y, both of which qualify for these tax credits, making them more affordable [2] - Surveys indicate that more than one-third of Tesla buyers would not have purchased their vehicle without the tax credit [2] Revenue Sources and Profitability - The potential elimination of tax credits could significantly dampen Tesla's sales growth in the future [3] - Last quarter, Tesla reported a net profit of $409 million, partially supported by $595 million in automotive regulatory credits, which are sold to competitors needing to meet emission standards [5] - If federal and state programs for these credits are cut, Tesla could lose a critical revenue source with nearly 100% profit margins [5] Sales and Market Position - With electric vehicle deliveries already declining, the loss of federal EV tax credits or automotive regulatory credits could further jeopardize Tesla's market position [6]

Core Viewpoint - Tesla is expected to experience its weakest quarter for car deliveries since 2022, with a significant reduction in forecasted deliveries due to the impact of CEO Elon Musk's controversial role in the Trump administration [1][2]. Delivery Forecast - JPMorgan analysts have lowered their forecast for Tesla's first-quarter deliveries by 20%, from 444,000 to 355,000, which is below the consensus estimate of 430,000 [1][2]. - This prediction indicates Tesla's lowest deliveries since Q3 2022 and an 8% decline compared to Q1 2024 [2]. Market Impact - Tesla's sales in Europe are under significant pressure, with new vehicle registrations dropping 50% year-over-year in January, attributed to Musk's statements regarding geopolitical issues [3]. - Analysts believe Tesla stands to lose the most among American car manufacturers due to potential changes in electric vehicle tax credits under the Trump administration [4]. Stock Performance - Despite the bearish forecast, Tesla's stock saw a rebound, gaining over 8% in early trading, although it remains down 38% year-to-date and 48% from its all-time high in December [6]. - JPMorgan's price target for Tesla is $120, representing more than 50% downside from its current price of $250 [4]. Public Perception - A CNN poll indicates that 53% of Americans hold a negative view of Musk, while only 35% view him positively [7]. Industry Context - JPMorgan is among several major firms, including Goldman Sachs and UBS, that have recently cut their Q1 delivery forecasts for Tesla [9]. - Tesla's stock initially surged after Trump's election, gaining up to 91% before declining due to concerns over Musk's role and potential tariffs [9].