Welcome to the Daily 5 report for Thursday, July 24.
2025 is shaping up to be a real downer for Tesla Inc., CEO Elon Musk and the EV maker's investors after a dismal second-quarter report.
We've already heard most of the reasons: Musk's polarizing political activities, disappointing U.S. consumer adoption of EVs, the impending loss of retail tax credits and an aging product lineup. Laurence Iliff explains it in this story.
But another factor in Tesla's deteriorating outlook is the rapidly disappearing subsidy it gets from legacy internal combustion engine competitors that purchase U.S. emissions credits to avoid fines.
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If you dig into Tesla's second-quarter earnings report, there is a line showing Tesla's regulatory credits dropped by half to $439 million from the same quarter last year. Even in the first quarter, Tesla still collected $595 million from competitors with combustion lineups.
It's a good bet this income will be heading toward zero soon because under the Trump administration's new policy, automakers will no longer have to pay penalties for emissions compliance.
Granted, Tesla is still by far the most valuable automaker on Wall Street and generates more than $22 billion in revenue per quarter, so the importance of the regulatory credits isn't what it used to be.
But those who have followed Tesla from the beginning know this income stream provided Musk with a financial lifeline during the lean times.
Morgan Stanley analyst Adam Jonas is one of them. His report today wasn't bullish.
"Tesla's outlook continues to lack any specific targets on revenues or margins," Morgan Stanley's report said.
"Elon Musk warned that the next few quarters may be 'rough' given changes in demand and the regulatory environment, including lower profit from the sale of ZEV credits. There was no attempt to sugar coat the market headwinds for EVs through the remainder of the year."
In other news, a longtime Arlington, Mass., Chevrolet dealership is suing General Motors to block the establishment of a new point within its relevant market area. The dealer contends GM failed to establish "good cause" under the state's dealer law.
The proposed new dealership in the Boston suburb of Waltham would cause "irreparable harm and economic damages," the suit by Mirak Chevrolet says. It's been a Chevrolet dealership since 1936.
Three other stories not to be missed are about EV owners waiting longer for completed repairs and often needing multiple visits, the new Corvette E-Ray hybrid launching in Europe with a "stealth" mode that allows it to start on electric power, and stop-start technology coming under fire from the Trump administration.
That's it for now. Have a great rest of your day.
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— Philip Nussel, online editor
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