The start of Donald Trump’s second presidential term is less than two weeks away. However, the chaos is already underway, with ridiculous cabinet picks and threats to take Greenland. Trump’s most self-destructive policy idea would be to scrap the vehicle emissions laws already in place. Tesla is financially reliant on fleet pooling agreements that would vanish if an emissions rollback happened, but Elon Musk was arguably the campaign’s largest donor and most vocal supporter.
A significant portion of Tesla’s profit comes from selling emissions credits to other automakers to help them meet regulatory standards. The all-electric automaker is expected to rake in $1 billion this year through deals with Ford, Stellantis, Toyota, Mazda, and Subaru in Europe. Tesla has collected $11 billion since 2021, roughly 34 percent of its total profit. Heatmap explains how the Trump administration could derail this gravy train:
Underpinning this whole regime is California’s Clean Air Act waiver, granted by the Environmental Protection Agency, which allows the state to set stricter vehicle emissions standards than those at the federal level due to the “compelling and extraordinary circumstances” it faces when it comes to air quality. During his first term, Trump sought to rescind portions of this waiver related to greenhouse gas emissions and the ZEV mandate, and his campaign stated that he will do so again. While the federal government’s comparably weaker emissions standards ensure that the credit market won’t disappear completely, eliminating the waiver would cause it — and Tesla — to take a major hit.
Despite Trump’s failure during his first term, never say never. It’s clear he’s willing to burn bridges if it will appease his zealous base. Trump will butt heads with Musk at some point in the next four years. The recent squabbling provoked by H-1B visas has shown there are two feuding wings of the Republican Party: the America First radical nationalists and the Musk-fawning Business Plot reenactors.
