Tesla’s Credit Revenue Loss ‘Devastating’ –  Strategist

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As an addendum to Daily Market Notes report to investors, while commenting on Tesla Inc (NASDAQ:TSLA)’s credit revenue loss, Louis Navellier wrote:

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Stellantis To Exit European Emissions-Credit Agreement With Tesla

Commenting on the announcement from Stellantis that it will exit a European emissions-credit (also known as carbon tax credits) agreement with Tesla, Louis Navellier, chief investment officer of Navellier & Associates said, “The loss of these regulatory credit revenues for Tesla is devastating and brings into question the future profitability of Tesla."

Mr. Navellier noted that during the first quarter Tesla collected a record $518 million in carbon/EV tax credits, plus $101 million in short-term gains from selling 10% of its $1.5 billion Bitcoin investment."In other words, Tesla made $619 million last quarter from “extraordinary” items. Subtract that $619 million from the $438 million in net earnings and they once again lost money in their operations."

In 2020 he noted, Tesla received $1.58 billion in EV tax credits, but only made net profits of $721 million total, so the company actually lost $859 million from making EVs. Clearly, this trend is persisting in the first quarter of 2021, and with the Stellantis announcement will be exacerbated.

With all of the facts that we have on hand now, it’s difficult to forecast profitability for Tesla in 2021, and with it may go the support of fundamental investors.  If nothing else, the increased awareness of the role that carbon tax credits play in the company’s profitability may lead to a fundamental re-valuing of the company in the coming year."