Tesla's (TSLA) Profitability Threated by Tax Credits - Navellier

Louis Navellier said the wild card associated with EV profitability remains the $1.58 billion tax/carbon credits that Tesla (NASDAQ: TSLA) received from other auto manufacturers in 2020, which accounted for virtually all of its $721 million in 2020 earnings.

"As VW Group, Ford, GM, Renault, NIO and Xpeng and other auto manufacturers continue to ramp their EV production, it will be interesting if this impacts Tesla’s tax/carbon credits that it receives from other auto manufacturers," he commented.

"Stellantis NV (formally Fiat Chrysler) has been the biggest buyer of Tesla’s tax/carbon credits, but is now throttling up its own EV production," Navellier added. "If Tesla’s EV competitors can eventually sell enough EVs that they do not have to buy Tesla’s tax/carbon credits, they will potentially threaten Tesla’s profitability. Several years from now, Tesla’s new manufacturing plants should be more efficient and will hold the key to its long-term profitability."

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