The massive legislative effort titled the "Big Beautiful Bill" is taking direct aim at what has become one of Tesla’s most critical and profitable revenue streams: the sale of US regulatory credits. The bill could eliminate billions of dollars from Tesla’s bottom line each year and will slow down the transition to electric vehicles in the US.
The financial stakes for Tesla are absolutely immense. In 2024, Tesla generated $2.76 billion from selling these credits. This high-margin revenue was the sole reason Tesla posted a profit in Q1 2025; without the $595 million from regulatory credits, Tesla’s reported $409 million in profit would have been a $189 million loss.
How the ZEV Credit System Works
Zero-Emission Vehicle (ZEV) credits are part of state-level programs, led by California, designed to accelerate the adoption of electric vehicles. Each year, automakers are required to hold a certain number of ZEV credits, with the amount based on their total vehicle sales within that state. Under this system, automakers that fail to sell a certain percentage of zero-emission vehicles must either pay a significant fine or purchase credits from a company that exceeds the mandate.
Automakers who fail to sell enough EVs to meet their quota have a deficit and face two choices: pay a hefty fine to the state government for each missing credit (for example, $5,000 per credit in California) or buy credits from a company with a surplus.
As an all-EV company, Tesla generates a massive surplus of these credits. It can then turn around and sell them to legacy automakers at prices cheaper than the fine, creating a win-win scenario: the legacy automaker avoids a larger penalty, and Tesla gains a lucrative, near-pure-profit revenue stream.
This new bill will dismantle this by eliminating the financial penalties for non-compliance, which would effectively make Tesla’s credits worthless. While the ZEV program is a state law, the Big Beautiful Bill will fully eliminate the penalties at a federal level.
A Multi-Billion Dollar Impact
The removal of US ZEGV credits would be a severe blow to Tesla’s financials. One JPMorgan analyst estimated that the move could reduce Tesla’s earnings by over 50%, representing a potential annual loss of $2 billion. While Tesla also earns similar credits in Europe and China, analysts suggest that 80-90% of its credit revenue in Q1 2025 came from US programs.
Why the Program Exists
While the impact on Tesla would be direct and immediate, the credit system has a wider purpose. It creates a strong financial incentive for legacy automakers to develop and accelerate their zero-emission vehicle programs, whether it’s hydrogen, electric, or another alternative.
Eliminating the need for these credits would remove that financial pressure. This could allow traditional automakers to slow their EV transition in the US without the fear of a financial penalty, potentially leading to fewer EV choices for consumers and a slower path to vehicle electrification in the country.
Big, But Not Beautiful
On Sunday Morning TV, Elon Musk was asked his thoughts on the Big Beautiful Bill. They were pretty simple. A bill could be big, or it could be beautiful - I don’t know if it can be both, Musk stated.
Elon Musk in new interview: "I was disappointed to see the massive spending bill, frankly, which increases the budget deficit and undermines the work the DOGE team is doing. I think a bill could be big, or it could be beautiful—I don't know if it can be both." pic.twitter.com/DnyjHN7xCY
The bill poses a threat to Tesla’s bottom line and to the adoption of EVs in the US market, where automakers will no longer have a financial incentive to transition to cleaner vehicles, a market they’ve regularly struggled in when competing against Tesla.
Tesla will have to work carefully in the future to cut expenses to remain profitable after the elimination of these regulatory credits.
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Tesla is rolling out a thoughtful and much-needed update to its in-vehicle Supercharger UI. The update is designed to provide drivers with details about Superchargers and their locations.
The update will add new icons and contextual messages to clarify Supercharger access requirements or restrictions, such as paid parking. There’s nothing worse than navigating to a Supercharger only to find out it's only for customers, requires paid parking, or some other service.
The new details will appear in various locations, including the Supercharger list, Supercharger module, and above the navigation directions when navigating to a Supercharger.
The new Supercharger icons will indicate the following requirements:
Valet-only Parking
Pay to Park
Access Codes
Parking Floor (the floor the Supercharge is on in a parking garage)
These icons are initially displayed when you’re searching for a Supercharger in the list of Superchargers. Additionally, when navigating to a site that includes any of the above, your vehicle will now display specific alerts for access requirements.
Access Codes and Parking Floor information will be provided above the navigation card when you reach the destination.
Solving Common Frustrations
Not a Tesla App
While these may seem like minor tweaks, they are a direct solution to some long-standing and common frustrations for many Tesla owners. Many drivers have likely experienced the scenario of following navigation to an unfamiliar urban Supercharger, only to arrive and discover it’s buried deep within a paid parking garage, with no advance warning of the fees or specific floor location.
This update provides all the critical information upfront so that drivers can make informed decisions on where they would like to charge. No more surprise parking fees, no circling a multi-level garage at 3% battery, desperately searching for the red and white Supercharger signs, and no more getting stuck searching for an access code to charge.
Little Details Matter
These Supercharger updates are the definition of quality-of-life improvements. Little details that make a big difference in usability.
As the Supercharger network continues its massive expansion into more complex and densely populated urban centers, providing this kind of granular, logistical data becomes increasingly important.
Release Date
While Tesla hasn’t announced when these features will be added, they’ll likely be included in the next major Tesla software update, presumably update 2025.24 or 2025.26.
The Tesla app was recently updated to v4.46.5 and added the ability to restrict location visibility for other drivers of the vehicle. Although the app update didn’t include these Supercharger updates, we expect these new Supercharger details to also be added to the Tesla app soon.
While the most exciting parts of the 2024 Impact Report were focused on Tesla’s future roadmap, a deeper dive into the data reveals a lot about what’s currently happening. The report is packed with key metrics on vehicle safety, ownership costs, and the explosive growth of Tesla Energy.
These aren’t just separate points - they all come together as part of a self-reinforcing and self-feeding engine. The data shows just how all these elements work together to help scale Tesla’s various businesses, while also advancing each one. Let’s take a look.
Pillar 1: Safety
The report makes some of Tesla’s boldest safety claims to date, but they’re all backed by data from the global fleet. This fleet data is one of Tesla's biggest advantages, allowing it to prove just how much safer its vehicles are.
As of 2024, vehicles using Autopilot technology were involved in one accident for every 6.77 million miles driven. This represents a safety record nearly 10 times better than the U.S. national average of one accident per 0.70 million miles.
Not a Tesla App
Alongside that, the entire Tesla lineup, including the Cybertruck, now boasts 5-star safety ratings from the NHTSA. Tesla vehicles are also 8 times less likely to be involved in a fire than the average vehicle in the United States, which completely blows the “EVs are a fire risk” claim out of the water.
In general, Tesla vehicles are far safer than their legacy automotive cousins, especially with new features being added in the name of safety, like the 4D cabin radar, customizable parental controls, and extreme body strength.
In fact, Tesla vehicles are so safe, you might be denied a driver’s license because your vehicle is too safe. That’s something that only Tesla could pull off.
But why does this matter? Safety is safety, right? In fact, the data that proves just how safe Tesla is helps build both consumer and regulatory trust, which in turn facilitates initiatives like the recent Robotaxi pilot. A safer car is a better car, which helps drive demand and fuel the growth of the fleet. That also means more data, which can be used to make the fleet safer.
Pillar 2: Total Cost of Ownership
The report also makes a compelling case that this best-in-class vehicle safety is now as affordable as mass-market alternatives when measured over the vehicle's total life cycle.
That is known as the Total Cost of Ownership, or TCO. The Model Y RWD has a TCO of $0.74/mi. In comparison to popular ICE competitors, like the Honda CR-V ($0.74/mi) and the Toyota RAV4 ($0.76/mi), the Model Y is a stellar competitor. When you look at comparable luxury SUVs like the BMW X3 ($1.19/mi), this number looks even better.
While the initial buy-in cost of the Model Y is higher, the TCO lowers due to many reasons. The lower cost of electricity to power the Model Y, the lower cost of ongoing maintenance, and the likelihood that the vehicle will stay on the road for longer all matter here.
EVs, and Teslas in particular, have lower maintenance costs compared to other vehicles. That all adds up over the years when the only things you need to replace are washer fluid, wipers, and tires, versus a whole litany of consumable parts and oils in an ICE vehicle.
Tesla needs to shatter the perception that EVs are prohibitively expensive by focusing on the total cost, which includes fuel, maintenance, insurance, and depreciation. This affordability expands Tesla's addressable market far beyond the premium segment, which is essential for growing the fleet. Combining that low TCO with safety is the key to mass-market adoption, which also helps to drive safety and data collection for FSD.
Pillar 3: Tesla Energy
The quiet winner of Tesla’s recent Earnings Calls and this Impact Report has been Tesla Energy, which supports the fleet, while also being a massive, rapidly growing business in its own right.
There are three key parts to this - the first is Megapack. Tesla has scaled Megapack deployments by 110% year-over-year since 2023, making an enormous impact on grid sustainability through the provision of energy storage and grid-forming services.
Alongside Tesla’s Autobidder and Opticaster software, which help make better use of renewables on the grid, Megapack can effectively double grid capacity when used correctly.
Alongside Megapack, Powerwalls are also making an impact. Over 100,000 Powerwall units are enrolled in Virtual Power Plant programs across the globe, which help manage and reduce grid fluctuations, while allowing customers to benefit from the ability to buy and sell energy. For many, it can yield a tidy profit per Powerwall, sometimes around $50-$100 USD per month.
Tesla has also achieved scale in energy. Giga Shanghai came online in Q1 2025, which brings Tesla Energy’s total global capacity to 80 GWh. With demand stretching well past 250 GWh, there’s plenty of room for Tesla to continue expanding their stationary energy storage business.
That is exceptionally important, as Tesla’s auto business has faced challenges in the last few quarters. Tesla Energy will be essential in picking up the slack from the loss in vehicle sales, as well as in powering the renewable energy that will ensure the fleet is more sustainable than ever.
Wrapping Up
Putting it all together, the 2024 Impact Report tells us that Tesla has a plan. Superior safety creates a desirable product. A low cost of ownership makes that product accessible to everyone. A booming energy business powers the whole ecosystem sustainably and profitably. Each pillar reinforces the others, creating a cycle that is accelerating Tesla's growth and its mission.
