Tesla is facing challenges following the passage of a new bill signed by President Donald Trump.

The legislation removes tax credits for electric vehicle (EV) purchases and fines for automakers exceeding emission standards.

The bill could sharply reduce Tesla’s income from US regulatory credit sales, which brought in US$595 million in Q1 2025.

Without these credits, Tesla might have posted a quarterly loss and is now seeking to boost credit sales in Europe and other markets to offset US declines.

Elon Musk, who opposed the bill, faces growing criticism over his political moves, including plans to start a third party, which coincided with a 7% drop in Tesla stock.

Tesla’s leadership is under scrutiny, its brand is losing bipartisan support, and Trump has reportedly threatened Musk’s other ventures, raising concerns over the company’s future.

🔗 Source: The Verge

🧠 Food for thought

1️⃣ Musk’s political activities have created a measurable brand crisis for Tesla

Tesla’s brand reputation has plummeted dramatically in recent years, falling from the eighth-most reputable brand in 2021 to 95th position 1.

This decline correlates with CEO Elon Musk’s increasing political involvement, with Tesla’s net favorability rating dropping to just 3% 2.

The impact on consumer behavior is substantial, with 61% of potential EV buyers now actively avoiding Tesla specifically due to Musk’s political stance 3.

Marketing professor Scott Galloway has characterized this situation as “one of the greatest brand destructions,” noting that Musk has alienated Tesla’s environmentally-conscious core customer base by aligning with voters who typically don’t support electric vehicles 1.

The shift in consumer perception has been particularly dramatic among Democrats, who historically favored Tesla by a 4-to-1 margin but now show significantly reduced purchase interest following Musk’s political endorsements 4.

Tesla’s experience demonstrates how rapidly brand perception can shift when a CEO’s political activities conflict with the values of their core customer demographic.

2️⃣ Financial markets have responded negatively to Tesla’s political entanglements