Tesla Set to Gain $266 Million Boost from Bitcoin in Q2, Must Increase Deliveries by Over 50% Month-Over-Month in June to Meet Estimates

Tesla Set to Gain $266 Million Boost from Bitcoin in Q2, Must Increase Deliveries by Over 50% Month-Over-Month in June to Meet Estimates

This article is not intended as investment advice. The author does not hold positions in any of the stocks discussed.

Elon Musk’s Departure: Impact on Tesla Sales

Following Elon Musk’s exit from the Trump administration, the anticipated improvements in Tesla’s sales have not materialized. The company continues to face challenges related to its brand image and politically motivated boycotts.

Decreasing Favorability Ratings: A Threat to Tesla?

On May 30, Musk formally stepped away from his association with DOGE during a press conference held in the Oval Office. Unfortunately, since that announcement, Musk’s favorability ratings have taken a dive, while Trump’s ratings have remained relatively stable.

The tension between Musk and Trump likely played a significant role in this disparity. Musk’s allegations of collusion concerning Epstein were met with Trump’s threats to reassess SpaceX’s government contracts, which has undoubtedly affected public perception.

Tesla’s Struggles with Delivery Estimates

Given the decline in Musk’s poll numbers, it is unsurprising that Tesla is struggling to meet its consensus delivery estimates. Colin Langan, an analyst at Wells Fargo, notes that Tesla will require a substantial over 50% month-over-month increase in deliveries to align with the consensus target of 411, 000 units.

Langan emphasizes Tesla’s current lack of “leverage on deliveries, ”which could further impact its profit margins. The recent U. S.Senate ruling to terminate the California Air Resources Board (CARB) waiver further complicates matters, as it indicates the likely conclusion of the Zero-Emissions Vehicle (ZEV) credits. This waiver has allowed California to impose stricter vehicle emissions standards, and its termination will mean automakers are no longer obligated to purchase these credits from Tesla.

Financial Implications of Regulatory Changes

According to Langan, regulatory credits made up a staggering 32% of Tesla’s EBIT (earnings before interest and taxes) in 2024, with ZEV credits accounting for about 50% of that total. The elimination of these credits could result in a severe hit of roughly 16% to Tesla’s EBIT.

Moreover, under a future Trump administration, demand for greenhouse gas (GHG) credits could further decline through relaxed environmental regulations.

Projected Deliveries and Negative Cash Flow

This quarter, analyst expectations indicate that Tesla will only deliver about 343, 000 vehicles, marking a notable decline of approximately 23% year-over-year.

“New Model Y appears weak given inventory building & promotions. There is also no update on the affordable model, the only driver of 2H volumes.”

Langan consolidates these challenges, including an expected EBIT reduction exceeding 60% year-over-year for 2025 alongside investment guidance indicating over $11 billion in capital expenditures, to forecast that Tesla may see free cash flow turn negative by approximately -$1.9 billion this year.

Interestingly, Langan does predict a one-time gain of $266 million from Tesla’s Bitcoin holdings in Q2, which could provide a temporary buffer for the company.

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