Tesla (NASDAQ: TSLA) is facing a projected earnings decline of nearly 30% next quarter compared to the same period last year, while its price-to-sales ratio remains high at 12.6. In contrast, Rivian Automotive trades at just 2.9 times sales.
Over 90% of Tesla’s sales come from the Model 3 and Model Y, both priced below $50,000, appealing to budget-conscious American consumers. These models currently qualify for federal tax credits of up to $7,500, incentivizing purchases.
However, a proposed bill by President Donald Trump aims to eliminate these federal EV tax incentives. In Germany, EV sales dropped by over 16% following the removal of tax credits in 2023, raising concerns about a similar impact on Tesla’s sales and earnings in the U.S. if the incentives are terminated.
