Stellantis N.V.

NIO Inc. NIO has been conducting demonstration activities and pilot programs in selected regions where it does not plan to open physical stores. Instead, the company is using its power swap stations as a point of engagement with potential customers to showcase its products and services directly through these facilities. In these areas, NIO deploys sales teams on-site to promote its offerings without relying on traditional retail spaces.
This strategy highlights a unique advantage for NIO, leveraging its power swap infrastructure as a unique selling point. Per the company’s survey, approximately 60% of ONVO users identified the power swap capability as the primary reason for choosing ONVO vehicles. This underscores the strong value that the power swap feature brings to ONVO’s market appeal and sales performance.
A similar pattern is observed with the NIO brand itself. For instance, in Xingfu Town, a small locality in Shandong Province, there are no NIO stores or showrooms, still the presence of several power swap stations has led to the acquisition of more than 1,000 NIO users in the area. This real-world example indicates how power swap stations can directly contribute to sales volume. As a result, the company is implementing a series of strategic initiatives focused on positioning power swap stations as a key sales channel. NIO carries a Zacks Rank #3 (Hold) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While battery swapping is not common among global automakers, making NIO’s push fairly unique, peers are investing in broader charging infrastructure and fast-charging technology.
Stellantis N.V. STLA, through its brand FIAT and charging arm Free2move Charge, is supporting a new initiative by Free2move and Ample to introduce modular battery swapping in Madrid’s car-sharing market. A fleet of Fiat 500e vehicles will use Ample’s swappable battery tech to simplify EV use and promote sustainable urban mobility. The pilot will also generate data to assess broader deployment of the technology.
Ford Motor Company’s F newly revealed patent application details an innovative battery-swapping system. Unlike traditional setups that rely on floor-mounted battery packs, this design, originally filed in 2018 and published by the USPTO in May 2024, features a drive-up docking station. The system leverages the vehicle’s own power to complete the swap to simplify the process and reduce costs.
NIO’s Price Performance, Valuation and Estimates
NIO has outperformed the Zacks Automotive-Foreign industry year to date. Its shares have gained 27.1% compared with the industry’s growth of 3.7%.
Image Source: Zacks Investment Research
From a valuation standpoint, NIO appears relatively overvalued. The stock trades at a forward price-to-sales (P/S) ratio of 0.71, above the industry’s 0.45.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 bottom-line loss has widened by a penny in the past 30 days, while for 2026, it has narrowed by 5 cents in the past seven days.
Image Source: Zacks Investment Research
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

How Do NIO's Swap Stations Turn Traffic Into Customers?

Key Points
Ford is planning to say goodbye to the Escape and Corsair.
Ford is directly replacing some of the production with an upcoming electric pickup truck.
Stellantis has made similar moves, only to regret them.
Ford Motor Company (NYSE: F) investors and consumers are about to wave goodbye to a couple of very successful crossovers. In a shock to some, Ford recently announced the Escape and Lincoln Corsair will both be retired and discontinued at the end of the 2026 model year. For the Escape, it means the end of a good run that was highlighted by helping revive Ford after the 2008 financial crisis and the Great Recession. For investors, though, this is a bit of a risk for Ford -- let's dig in.
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Gone but not forgotten
Ford's announcement shocked many because the two crossovers are popular and sell well. In fact, the Escape sold 93,805 vehicles in the U.S. through July, which was enough to outsell Ford's iconic Bronco and Bronco Sport separately, and that's with the Bronco posting impressive 45% year-over-year growth. Meanwhile, the Corsair was the second-best-selling Lincoln model through July, behind only the Nautilus.
For consumers, if you're a huge fan of the Escape, fear not because Ford will still sell the 2026 model well into next year. If you're an investor, this is a little worrisome because one of the most important things you can do in the automotive industry is cover key segments. Exiting them without a plan doesn't work out well -- just ask Stellantis. Stellantis is currently scrambling to replace the Jeep Cherokee, a nameplate that accounted for a sizable chunk of Jeep sales before it was discontinued earlier this decade.
However, as you can see in the graph below, despite outselling popular models through July, the Escape has actually been having some of its worst-selling years ever over the past five years.
Unlike Stellantis, Ford might already have its replacement. It recently announced an upcoming midsize electric pickup truck, more similar in size to the Maverick than the Ranger, and priced at around $30,000. This is a very compelling price point for an electric vehicle (EV), especially a truck, even if we don't see it until 2027.
In fact, Ford is doing exactly the opposite of Stellantis right now. Stellantis is working to replace the Cherokee-sized SUV and bring back a gasoline-powered version of the Charger muscle car while simultaneously hitting pause on its all-electric Ram pickup truck.
On the flip side, Ford is directly replacing the production of both the Escape and Corsair with this upcoming pickup at its Louisville Assembly Complex. Ford has invested around $5 billion in the Louisville complex, creating roughly 4,000 jobs as it prepares its recently unveiled Universal EV Platform to usher in a family of up to eight new EVs.
A big gamble
Ford is making a big gamble that it can replace more profitable gasoline-powered vehicles with its electric pickup. That could make some investors skittish, considering that Ford's Model-e, the division responsible for EVs, lost $5.1 billion during 2024. The good news is that Ford anticipates this electric pickup to be profitable early on, which is a tangible step forward in the evolution of EVs that have so far sparingly produced a profit for anyone across the globe.
It's also a risk to swap out two popular gasoline models with an electric pickup when you consider that EV sales have been slower to gain traction in the U.S. than anticipated. Further, with the current administration deadset on rolling back EV incentives and tax credits, the road in the near term might be even more challenging.
For long-term investors, while this move could give you reason to pause, rest assured that it's at least a strategic decision looking into the future -- something Detroit automakers haven't always been known to do.
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Ford Says Goodbye to 2 Popular Crossovers

Autonomous Vehicles Hit an Inflection Point; GPT-5 Is Here

Key Points
Archer Aviation hasn’t generated any revenue yet.
But it’s sitting on a big backlog that nearly matches its market cap.
It plans to significantly expand its business over the next few years.
Archer Aviation (NYSE: ACHR), a developer of electric vertical take-off and landing (eVTOL) aircraft, has seen its stock soar more than 180% over the past 12 months. That rally was driven by the market's enthusiasm for the nascent eVTOL market, but the company hasn't actually generated any revenue yet and continues to rack up steep losses.
Should you hop on that bandwagon and expect the stock to soar? Or is too much growth already baked into its market cap of $6.6 billion?
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What does Archer Aviation do?
Archer's Midnight eVTOL aircraft can carry a single pilot and four passengers. It travels up to 100 miles on a single charge with a maximum speed of 150 miles per hour. Its drone-like design makes it easier to land in crowded urban areas than traditional helicopters.
Many companies, including United Airlines (NASDAQ: UAL), Future Flight Global, Soracle -- a joint venture between Japan Airlines (OTC: JAPSY) and Sumitomo (OTC: SSUM.F) -- Ethiopian Airlines, and Abu Dhabi Aviation, plan to use the Midnight for their air taxi services.
Archer also plans to launch its own air taxi service within the next two years, and it will be the official air taxi services provider for the 2028 Summer Olympics in Los Angeles.
One of Archer's biggest investors is the automaker Stellantis (NYSE: STLA), which hired it as the contract manufacturer for its own eVTOL aircraft. Archer also holds a contract with the U.S. Air Force. It delivered its first aircraft to the Air Force for testing purposes last year, and it expects to deliver five more under that contract over the next few years.
When will Archer start to generate revenue?
Before Archer went public by merging with a special purpose acquisition company (SPAC) in 2021, it claimed it would deliver its first 10 eVTOLs and generate $42 million in revenue in 2024. But it didn't generate any revenue last year as it racked up a net loss of $652 million.
That big miss was disappointing, but Archer expects to ramp up its production to 10 aircraft in 2025, 48 aircraft in 2026, 252 in 2027, and 650 in 2028. With a backlog of about $6 billion, there's plenty of pent-up demand.
Archer's manufacturing partnership with Stellantis, its new AI partnership with Palantir to optimize its manufacturing and aviation systems, and fresh rounds of funding could help it achieve those ambitious goals. But it has also more than doubled its number of outstanding shares since its public debut, and that dilution will likely continue as it subsidizes its salaries with big stock bonuses and issues more shares to fund its acquisitions.
How much bigger could Archer grow?
For 2025, analysts expect Archer to generate just $1.4 million in revenue as it delivers its first Midnight aircraft in Abu Dhabi. Assuming it ramps up its production and the Federal Aviation Administration (FAA) finally approves its first commercial flights in the U.S. this year, analysts expect its revenue to surge to $103.4 million in 2026 and $450.8 million in 2027.
From 2024 to 2030, MarketsandMarkets estimates the eVTOL industry will have a compound annual growth rate (CAGR) of 35.3%. From 2031 to 2035, it expects a CAGR of 27.6%. If Archer can scale up its business, match analysts' revenue expectations, and continue to grow its top line at a CAGR of 30% from 2027 to 2035, its annual revenue could hit $3.7 billion by that final year. It could also finally turn profitable as economies of scale kick in.
If the company achieves that explosive growth and trades at a reasonable 10 times sales by 2035, its market cap could rise nearly sixfold to $37 billion. It could grow even faster if it acquires its closest competitor, Joby Aviation, and its other smaller industry peers.
Is Archer the smartest investment you can make today?
Archer is still a speculative stock, but it could have a bright future. That might be why its insiders bought nearly seven times as many shares as they sold over the past 12 months. It's still risky, and I probably wouldn't call it the smartest investment you can make today, but it could be a good long-term play for daring growth investors.
Should you invest $1,000 in Archer Aviation right now?
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Is Archer Aviation the Smartest Investment You Can Make Today?

Key Points
SoundHound's market opportunity continues to grow.
Q2 saw numerous impressive customer wins and 217% sales growth.
What does soaring revenue mean for the stock?
When I last spoke to you about SoundHound AI (NASDAQ: SOUN) in mid-July, I outlined three reasons the stock could explode to the upside. The stock rocketed 40% since the article was published, assisted by another stellar earnings report. Given the recent action, a debriefing is definitely in order. Let's take a look at what went right and what's next for this up-and-coming artificial intelligence (AI) player.
Market, customers, and revenue (oh my!)
The first pillar I mentioned in the previous article was the massive market that speech recognition has. Automobiles, drive-thrus, retail, and customer service are some of the largest and most obvious markets. Voice recognition technology in automobiles is advancing rapidly thanks to companies like SoundHound AI. The days of simply saying "play music" and hoping it doesn't make another phone call are gone.
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Future voice technology in vehicles will enable complex interactions, such as "give me directions to the highest rated Italian restaurant within five miles of my route home." Quite a step up!
Drive-thrus and customer service will also be served by AI technology with limited human involvement. This is a game-changer for the cost structures of businesses. The savings will be immense, and companies can't afford to be left behind. Statista pegs the market opportunity at $16 billion by 2030; however, this estimate may be too conservative.
Other research firms peg the total addressable market at more than $140 billion. The truth probably lies somewhere in between.
The key for SoundHound to capture as large a piece of the pie as possible is to win new customers and expand offerings with current customers. SoundHound's customer list is impressive, with well-known brands like Stellantis, Hyundai, White Castle, Jersey Mike's, and many more. SoundHound reported Q2 wins of Red Lobster, Applebee's, IHOP, and a major Chinese automotive brands, and expansions with current customers like Chipotle and Firehouse Subs. SoundHound tech is now operating at more than 10,000 restaurant locations.
The terrific execution translated easily to the top line with 217% year-over-year sales growth from $13.5 million to $42.7 million. As shown below, not only is SoundHound's revenue growing, but the growth rate is accelerating.
Sales grew 151% year over year in Q1 2025, which was exciting. But the 217% growth in Q2 took it to a new level.
What's next?
In addition to the obvious use cases for speech recognition AI, emerging markets include smart homes, financial services, smart TVs and entertainment, healthcare, and employee training. Using AI in employee training, for example, will be a huge time and cost saver. A new team member can request step-by-step instructions for procedures, seek specific guidance from company handbooks, and receive coaching from AI on best practices, brand features, and more. The technology is only scratching the surface so far.
But what does this mean for SoundHound stock? It's important to note that SoundHound isn't profitable and is losing cash from its operations. This isn't unusual for smaller, fast-growing tech companies, but it means that the company raises money to fund growth by selling additional shares of stock. This dilutes current shareholders. It isn't ideal, but it is necessary for now. The plan is for the company to become cash-flow-positive as revenue continues to rise.
The stock trades for 46 times the last 12 months' sales; however, this will drop to 36 if SoundHound hits the high end of its 2025 guidance of $178 million in revenue. The valuation is high by traditional metrics, but a company growing sales by more than 200% is not at all typical. The bottom line is that the stock is exceedingly difficult to value at this stage. For this reason, the stock isn't for everyone, and investors should be cautious. Here's a handy guide to risk tolerance.
The biggest long-term factor for success for investors will be whether the company continues to execute its growth strategy. So far, so good. The stock will likely experience significant fluctuations as it matures. Long-term investors should consider taking some profits when it rises, and adding to a core position on significant dips.
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Bradley Guichard has the following options: long January 2027 $20 calls on SoundHound AI. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends Stellantis and recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

SoundHound Crushed Earnings and the Stock Soared. Here's What Could Come Next.

For Immediate Release
Chicago, IL – August 11, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Archer Aviation Inc. ACHR, United Airlines Holdings, Inc. UAL, Stellantis N.V. STLA and Palantir Technologies Inc. PLTR.
Here are highlights from Friday’s Analyst Blog:
Is Archer Aviation Stock a Buy, Hold or Sell Before Q2 Earnings?
Archer Aviation Inc. shares have surged 169.2% over the past year, significantly outpacing the Aerospace - Defense industry's rally of 16.1%. Consequently, many investors who haven't yet invested in the electric vertical takeoff and landing (eVTOL) stock are questioning whether it's still a good time to buy. With the company's earnings approaching, is this the right moment to invest? Let's explore.
Reasons to Be Bullish on Archer Aviation Stock
According to Grand View Research, the global eVTOL aircraft market is expected to witness a compound annual growth rate (CAGR) of 54.9% from 2024 to 2030. Advances in battery technology will boost eVTOL capabilities, allowing for longer flights and less downtime. Archer Aviation thus has the chance to capitalize on this impressive growth as it strives for notable success in the worldwide eVTOL market.
Archer Aviation is well-positioned for rapid development through collaborations with United Airlines Holdings, Inc. to build an air taxi network and with Stellantis N.V. to expand manufacturing capacity.
The company is launching its first air taxi service in Abu Dhabi. If successful, this could pave the way for similar services in other countries, primarily in the United States, and help secure final approval from the Federal Aviation Administration ("FAA").
Archer Aviation's partnership with defense startup Anduril is also noteworthy. Together, they are working to develop hybrid eVTOL aircraft for military applications. Meanwhile, Archer Aviation is also working with Palantir Technologies Inc. to develop AI software for aviation systems (read more: Palantir Achieves $1B Revenues, Is It Too Late to Invest?).
These partnerships are expected to support Archer Aviation's growth, especially as global tensions might lead to increased defense spending, benefiting the company's efforts to explore defense markets.
Should You Buy, Hold, or Sell Archer Aviation Stock Now?
With ongoing partnerships and the Abu Dhabi project expected to progress smoothly, along with likely FAA approvals, shareholders may feel motivated to retain their shares.
However, new investors should remain cautious, especially before the upcoming earnings report scheduled for Aug. 11, after market close. Archer Aviation is projected to report a loss of 19 cents per share, with recent revenue generation being minimal.
Historically, Archer Aviation's stock performance has been more influenced by positive news than by financial results. If management doesn't provide optimistic updates—such as plans to produce two aircraft per month by the end of 2025 or progress on Midnight's test flights in Abu Dhabi—investors might expect a decline in share prices.
Conversely, any positive news regarding these initiatives could lead to an increase in Archer Aviation's stock value, encouraging investors to buy. For now, Archer Aviation has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here.
Zacks Investment Research
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
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The Zacks Analyst Blog Highlights Archer Aviation, United Airlines, Stellantis and Palantir Technologies

U.S. legacy automaker Ford F is pushing back two major electric vehicle (EV) launches as it shifts focus to smaller, cheaper EVs that can turn a profit.
The next-generation full-size electric pickup, known internally as “Project T3” and set to replace the F-150 Lightning, will now debut in 2028. That’s a few months later than the previous 2027 target — and far from its original plan to hit the market this year. The truck will be built at Ford’s BlueOval City plant in Tennessee, with prototypes still expected in 2027.
Ford’s next-generation E-Transit electric van has also been delayed from 2026 to 2028. Planned for production at the Ohio Assembly Plant, the van was first announced in 2022 with a mid-decade launch in mind.
These delays mark another adjustment to Ford’s EV strategy. Instead of pushing out large, high-priced EVs, the automaker is investing in a new platform for compact, affordable electric vehicles. The platform is expected to underpin several models, including a small pickup truck due in 2027. More details on this are expected to be announced tomorrow.
Ford’s CEO Jim Farley has pointed to Chinese automakers as the company’s main EV competitors, noting their ability to produce stylish, high-quality electric cars at inexpensive price points. To stay competitive, Ford is aiming to reduce costs with streamlined platforms and lower-cost batteries.
Ford’s current EV lineup — Mustang Mach-E, F-150 Lightning and E-Transit — remains in place, but the next-gen models will arrive later than planned. The bet now is that smaller, more affordable EVs will help the brand stay relevant and profitable in a competitiveglobal market
Whether this pivot works will depend on how fast Ford can bring its affordable EVs to market — and how well they stack up against the offerings from China and other competitors. The delays in its flagship EV truck and van could concern some customers, but they also give Ford breathing room to focus on profitability and cost leadership.
The Zacks Rundown on Ford
Shares of Ford have increased around 15% over the past year, underperforming the industry as well as its closest peer General Motors GM but outperforming the Italian American carmaker Stellantis STLA. While shares of General Motors have gained 24.6%, Stellantis stock has declined 38% over the same timeframe.
Image Source: Zacks Investment Research
From a valuation standpoint, F trades at a forward price-to-earnings ratio of 0.28, below the industry average. It carries a Value Score of A. Meanwhile, General Motors and Stellantis trade at just 0.29X and 0.16X, respectively.
Image Source: Zacks Investment Research
See how the Zacks Consensus Estimate for Ford’s earnings has been revised over the past 60 days.
Image Source: Zacks Investment Research
F stock currently carries a Zacks Rank #3 (Hold).
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Is Ford Trading EV Delays for Long-Term Gains in Affordable Models?

Archer Aviation Inc. ACHR shares have surged 169.2% over the past year, significantly outpacing the Aerospace - Defense industry’s rally of 16.1%. Consequently, many investors who haven't yet invested in the electric vertical takeoff and landing (eVTOL) stock are questioning whether it’s still a good time to buy. With the company’s earnings approaching, is this the right moment to invest? Let’s explore.
Reasons to Be Bullish on Archer Aviation Stock
According to Grand View Research, the global eVTOL aircraft market is expected to witness a compound annual growth rate (CAGR) of 54.9% from 2024 to 2030. Advances in battery technology will boost eVTOL capabilities, allowing for longer flights and less downtime. Archer Aviation thus has the chance to capitalize on this impressive growth as it strives for notable success in the worldwide eVTOL market.
Archer Aviation is well-positioned for rapid development through collaborations with United Airlines Holdings, Inc. UAL to build an air taxi network and with Stellantis N.V. STLA to expand manufacturing capacity.
The company is launching its first air taxi service in Abu Dhabi. If successful, this could pave the way for similar services in other countries, primarily in the United States, and help secure final approval from the Federal Aviation Administration (“FAA”).
Archer Aviation’s partnership with defense startup Anduril is also noteworthy. Together, they are working to develop hybrid eVTOL aircraft for military applications. Meanwhile, Archer Aviation is also working with Palantir Technologies Inc. PLTR to develop AI software for aviation systems (read more: Palantir Achieves $1B Revenues, Is It Too Late to Invest?).
These partnerships are expected to support Archer Aviation’s growth, especially as global tensions might lead to increased defense spending, benefiting the company’s efforts to explore defense markets.
Should You Buy, Hold, or Sell Archer Aviation Stock Now?
With ongoing partnerships and the Abu Dhabi project expected to progress smoothly, along with likely FAA approvals, shareholders may feel motivated to retain their shares.
However, new investors should remain cautious, especially before the upcoming earnings report scheduled for Aug. 11, after market close. Archer Aviation is projected to report a loss of 19 cents per share, with recent revenue generation being minimal.
Image Source: Zacks Investment Research
Historically, Archer Aviation’s stock performance has been more influenced by positive news than by financial results. If management doesn’t provide optimistic updates—such as plans to produce two aircraft per month by the end of 2025 or progress on Midnight’s test flights in Abu Dhabi—investors might expect a decline in share prices.
Conversely, any positive news regarding these initiatives could lead to an increase in Archer Aviation’s stock value, encouraging investors to buy. For now, Archer Aviation has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Is Archer Aviation Stock a Buy, Hold, or Sell Before Q2 Earnings?

For years, Tesla TSLA has made big money not just from selling electric vehicles (EVs), but also from selling regulatory credits to other automakers. These credits have aided Tesla's overall margins, even when car sales were under pressure. But that extra boost is shrinking fast now. And if the trend continues, it could just worsen things for the company.
Tesla has been selling billions of dollars’ worth of regulatory credits to legacy automakers who needed them to offset their gas-guzzling vehicle fleets and avoid fines. The revenues—more than $10.6 billion since 2019—have been a critical boost to Tesla’s profits, especially during times when the core business struggled to stay in the black.
In Q2’25, Tesla reported $439 million in regulatory credit revenues. On the surface, that still looks solid. But the trend tells a different story. Credit sales have fallen sharply from $890 million in Q2’24, marking a nearly 50% drop in just a year. And it’s not a blip—it’s a steady slide. From $739 million in Q3’24 to $692 million in Q4’24, then $595 million in Q1’25—and now $439 million.
Policy Shifts and EV Competition Add Pressure
Last month, President Trump’s tax and spending bill officially scrapped the penalties for automakers failing to meet Corporate Average Fuel Economy (CAFE) standards. That’s a game-changer. Automakers who previously bought credits from Tesla to avoid hefty fines—over $1.1 billion worth from 2011 to 2020—now have no reason to do so. The penalty is effectively gone.
That removes the key incentive behind Tesla’s regulatory credit windfall. And it couldn’t come at a worse time. Tesla is already facing a slump in deliveries and profits. The company recently posted two straight quarters of delivery declines. Without credit sales to somewhat plug the gap, Tesla’s core business will face more pressure.
Some automakers may still have long-term credit purchase agreements with Tesla, but those contracts may be renegotiated—or even canceled—early. In fact, the credit revenues could disappear by next year.
And it's not just the policy shift. Many legacy automakers like General Motors GM, Ford F and Stellantis STLA are also shifting their gears to electric. As they scale up their EV output and reduce emissions, they need fewer regulatory credits.
A Fading Lifeline Tesla Can’t Ignore
While headlines are busy tracking CEO Elon Musk’s political battles or the loss of $7,500 EV buyer tax credits, this regulatory credit risk of Tesla has not gotten much attention. But the risk is real—and growing.
Regulatory credits have quietly propped up Tesla’s profits for years. But the safety net could be vanishing. Unless Tesla can make up for the loss with stronger sales, tighter cost controls or big wins in robotaxis, the road ahead could get bumpier.
The Zacks Rundown for Tesla
Shares of Tesla have lost around 20% over the past six months compared with the industry’s decline of 17%. Meanwhile, shares of Ford and General Motors are up 8% and 10%, respectively, while Stellantis is down 32% during the same timeframe.
Image Source: Zacks Investment Research
From a valuation standpoint, TSLA trades at a forward price-to-sales ratio of 9.5, way above the industry. It carries a Value Score of D. Meanwhile, General Motors trades at a forward sales multiple of 0.28, Ford at 0.27 and Stellantis at 0.14.
Image Source: Zacks Investment Research
See how the Zacks Consensus Estimate for TSLA’s earnings has been revised over the past 90 days.
Image Source: Zacks Investment Research
Tesla stock currently carries a Zacks Rank #4 (Sell).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tesla's Regulatory Credit Cash Cow Is Fading Fast: Why it Matters

Key Points
For a second straight quarter, Tesla posted weak auto deliveries and revenue.
The company once again hyped its robotaxi and robot ambitions.
The stock is largely valued based on future bets paying off, making it risky to own.
Tesla (NASDAQ: TSLA) has long been a stock that's traded more on the vision of its founder Elon Musk than on its actual fundamentals. However, with the stock sinking following Tesla's lackluster second-quarter earnings report -- despite more big promises around robotaxis and robots -- reality might finally be catching up to it.
Musk has done a lot of brand damage to Tesla over the past six months or so. His funding of President Donald Trump's campaign and overseeing the Department of Government Efficiency (DOGE) angered many liberal-leaning consumers. He then later got in a very public feud with the President he helped get elected, alienating himself and Tesla from many conservatives, as well.
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The fallout could be seen in Tesla's Q2 numbers, while tariffs also stung the company. Meanwhile, it will soon see an even potentially bigger headwind due to the expiration of the U.S. electric vehicle (EV) credit by the end of third-quarter 2025.
Its core auto business is struggling
For the second straight quarter, Tesla saw big declines in its core auto business. After a 13% drop in deliveries in the first quarter, deliveries fell by the same amount in Q2. Model 3 and Model Y deliveries decreased by 12%, while other models plunged by 52%.
Tesla's auto revenue plunged 16% to $16.7 billion in the quarter. Within its auto revenue, its regulatory credits, which are pure gross margin, fell by more than half to $429 million. Not surprisingly, this affected Tesla's profitability in the quarter.
Even worse for the company is that many of these regulatory credits will soon be going away. Trump's "Big Beautiful Bill" will eliminate the current federal $7,500 EV tax credit at the end of September. As a result, Musk admitted that the company could be in for a "few rough quarters" ahead.
Overall, Tesla's revenue fell 12% to $22.5 billion. Its energy generation and storage revenue dropped 7% to $2.8 billion, while its service revenue climbed 17% to nearly $3.1 billion. Adjusted earnings per share sank 23% to $0.40, while its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) declined by 7% to $3.4 billion.
Tesla's cash flow is also starting to take a hit. Its operating cash flow sank 30% to $2.5 billion, while its free cash flow cratered by 89% to $146 million.
More big promises
Given Tesla's poor operating results, it was not surprising that Musk and the rest of management directed the conversation toward Tesla's big bets on autonomous driving and robotics. Musk claimed that Tesla will expand its autonomous ride-hailing service to cover half of the U.S. population by the end of this year, pending regulatory approval.
Now, of course, such a statement makes little sense. The company is currently only testing a small geofenced area in Austin, Texas, with safety drivers, and it has already had a number of safety issues in this small pilot. Its technology appears nowhere close to ready to be adopted in cities countrywide.
But let's say, for argument's sake, that the technology and regulatory approvals work out. The company would then need hundreds of thousands of Level 4 autonomous driving vehicles on the road (not its current Level 2 vehicles). Beyond that, it would also need service and cleaning centers, as well as charging infrastructure in place to handle a fleet of that size. It would also need to have a consumer-facing platform that can handle things like pre-trip pricing, dynamic fare calculations, disputes, and refunds. There is no evidence that Tesla has any of this in place.
Meanwhile, Musk continued to sing the praises of his Optimus robot, saying it will be Tesla's biggest product ever. He said Optimus 3 has an "exquisite" design with no significant flaws. He's looking to have a prototype of the new robot by the end of this year and then scale production next year. He then wants to be able to produce 1 million Optimus robots a year within five years.
Once again, this seems ambitious. Amazon (NASDAQ: AMZN) is currently an AI robotics leader, and companies like Boston Dynamics have showcased robots with advanced mobility, so robots can be hugely useful. However, all Tesla has ever demonstrated is a humanoid robot that could only do carefully choreographed tasks. Today, most factory automation is done by specialized, fixed-purpose robots. The use case for a humanoid robot is still very questionable.
Should investors buy the dip?
Even after the stock pullback, Tesla's stock trades at a forward price-to-earnings ratio (P/E) of over 170x based on 2025 analyst estimates, while its profitable auto peers -- like Ford, General Motors, and Stellantis -- generally have multiples of 10 or less.
With its core auto business struggling, this indicates that the bulk of Tesla's market cap is predicated on ambitions that may or may not pan out. Given the company's track record of overpromising and under-delivering, this is not a bet I'd make.
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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Tesla. The Motley Fool recommends General Motors and Stellantis. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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