Trump's revenge on Musk: the Big Beautiful Bill may sink Tesla

On Independence Day, Donald Trump signs his "Big Beautiful Bill", a tax and budget bill that, besides exploding the debt to over 120% of GDP, could turn into an unprecedented mauling for his (former) ally Elon Musk. Elected also thanks to the financial support (250 million) of Tesla's CEO during the election campaign, the president, thanks to the vote of Congress, has passed a measure that threatens to inflict a multi-billion dollar dry loss on the Texan company. The damage is industrial and systemic.

The first problems on the incentive front. The $7,500 federal tax credit for the purchase of electric vehicles - a mainstay for US demand - will be eliminated by September. The $4,000 bonus for used electric cars will also disappear, as will the credit for company fleets. A huge problem for Tesla, already down 13.5 per cent in second-quarter deliveries, and now facing the market without fiscal support.

A real blow is the de facto elimination of the CO₂ credit system. In the US, Tesla earned billions by selling 'emission credits' to other manufacturers to offset excess emissions. Under the new law, penalties for those who fail to meet CAFE - Corporate Average Fuel Economy - standards, fines that previously cost carmakers such as Stellantis and GM hundreds of millions of dollars, are zeroed out. No fines, no incentive to buy certificates: this means that an entire revenue item - 2.8 billion in 2024, or 40 per cent of net profit - is set to collapse.

And it doesn't end there. Tesla produces batteries, operates over 2,600 charging stations in the US and sells photovoltaic systems. All sectors that had benefited from Biden's Inflation Reduction Act, now effectively dismantled by Trump. So goodbye to rebates for solar roofs, deductions for home storage (Tesla's other growing business), and bonuses for heat pumps. All that remains are the tariff unknowns and a revolting California, ready to oppose them in court.

The rift between Musk and Trump is now complete: the former threatens a third party, the latter insinuates that without subsidies Musk would be back in South Africa. Probably the richest man in the world (but for how much?) is wondering why he would finance a politician with hundreds of millions, who now puts Tesla's entire business model at risk.