Bad News Keeps Rolling in for Tesla

Right now, they are dealing with sales and fits spiraling lower, consumer backlash to Elon Musk's political ambitions, and the State of California trying to suspend Tesla's dealer license for 30 days, among other developments

But there's maybe an even bigger blem brewing, and one that will come with serious financial impact for the electric vehicle (EV) maker

Moreover, What's going on

However, One big blem brewing for Tesla investors involves the company's sale of regulatory credits

Government put in place an incentive system for automakers to meet environmental regulations

Nevertheless, It dished out credits to auto companies that complied with emissions standards and gave out financial penalties to those that didn't meet the standards

What this has meant for automakers that primarily still sell gasoline-powered vehicles is that they had to purchase regulatory credits from companies Tesla, which only sells EVs and faces no penalties

However, the Republican tax and spending bill that passed earlier in July removes the financial penalty for automakers falling short of emissions standards, in today's market environment

That means the incentive for buying regulatory credits from Tesla is gone, and demand for its credits could dry up much faster than anticipated

At the same time, So just how big a deal is this

Tesla's Cybercab (shown above) and robotaxi service will need to pay off sooner, rather than later

Moreover, Nevertheless, Image source: Tesla (an important development)

To say that the company might not exist without this income source during its early years is not an exaggeration

There's a bit of a silver lining for Tesla, though, because the company has long-term contracts with some of its competitors to buy these credits, and if the latter honor the contracts, rather than try to get out of them early, the regulatory gravy train could continue a bit longer

What the re reveals is development also comes as Tesla could really use the extra fits, since its margins are thinning, sales are declining, and its vehicle lineup is aging, in light of current trends

Nevertheless, It's also happening as the company is almost facing an identity crisis: Is it an EV maker, an artificial intelligence company, or a robotaxi service -- or some combination of the three, in light of current trends

Long-term investors should stay the course, but they would also be wise to expect a tough few quarters as incentives expire in the U (remarkable data)

Market, tariffs continue to add uncertainty, and the early stages of its robotaxi story develop, considering recent developments.