Investor's Corner
Tesla’s rumored sale of regulatory credits to VW to last ‘two to three years’
Tesla’s rumored sale of its regulatory credits to Volkswagen to help the German automaker reach emissions targets is likely to last “two to three years,” according to VW Auto Group CEO Herbert Diess.
The sale of credits will help Volkswagen align with regional emissions targets that could affect the company’s ability to conduct business in China and the United States. The emissions targets are different in every country, some with more strict regulations than others. China has some of the toughest emissions regulations globally due to the massive number of passenger vehicles that operate in the country. Due to this fact, some automakers, like Volkswagen, must purchase regulatory credits from other automakers to meet the emissions targets. It helps the purchasing automaker avoid hefty fines, while it can help the selling automaker solidify financial safety and fund projects.
Tesla doesn’t have an issue reaching these targets due to its environmentally-friendly electric powertrains. For over a year, Tesla has been selling regulatory credits to other automakers, a deal that has helped Tesla fund some of its international projects. One of the most notable deals is Tesla’s sale of credits to Fiat-Chrysler Automobiles, requiring FCA to pay Tesla $2 billion through 2023. The sale was to help FCA reach the European Union’s CO2 requirement of 95g per kilometer in 2020. This deal recently ended after Stellantis CEO Carlos Tavares stated that the company would no longer need to purchase the credits from Tesla. This was due to the merger between Peugeot S.A. (Groupe PSA) and FCA in January 2021, which ultimately birthed Stellantis. Stellantis now controls 14 traditional automotive brands, including Fiat, Chrysler, Jeep, Maserati, and Peugeot.
However, Tesla isn’t losing all of its deals for its regulatory credits. It appears Volkswagen will still purchase credits from Tesla. Although it hasn’t been officially confirmed who VW will get its credits from, recent reports indicate that Tesla will be the seller. Recent comments from Herbert Diess, CEO of the Volkswagen Auto Group, on the company’s Earnings Call earlier today seem to indicate that the company will continue for several years.
?@VWGroup ‘s Diess confirms they are paying regulatory credits in China and US (likely to @tesla) and says they will continue to for the next “two to three years”, phasing out as the EV roll-out ramps up.
Chinese Q1 BEV volumes just 6,244 units compared to 42,421 in Europe. pic.twitter.com/KrCdgjOafy
— Matthias Schmidt (@auto_schmidt) May 6, 2021
“In Europe, we are confident that we will comply with the fleet targets,” Diess said during the Earnings Call. However, the case is different in China and the United States, and Diess says that the automaker will need to rely on credits to avoid the fines for “the next two or three years.” With VW’s expanding EV strategy, it appears that the German company will no longer need to purchase these credits by 2024 at the latest.
In China, VW will likely be purchasing the credits from Tesla. After a report from Reuters in April indicated that VW’s joint venture with state-owned Chinese carmaker FAW, called FAW-Volkswagen, would be purchasing credits from Tesla to meet the environmental standards set by the Chinese government. Three individuals close to the matter informed Reuters of the deal.
Concerns regarding Tesla’s financials and its ability to remain profitable without the excessive sale of EV credits continue to rage on. However, Tesla has shown that it generates revenue through several mediums, including automotive sales, car leases, and other investments, including the automaker’s Bitcoin purchase in late 2020. The $1.5 billion Bitcoin purchase was a way for not immediately used cash could generate “some level of return…but also preserve liquidity,” Tesla CFO Zachary Kirkhorn said during the company’s most recent Earnings Call.
Ultimately, it isn’t known who Volkswagen will purchase the credits from globally. However, if recent reports are correct, Tesla will be sending its credits to VW in return for hefty $56 per green credit prices.
Tesla stock (NASDAQ: TSLA) just got a price target boost from its biggest bear, Gordon Johnson of GLJ Research, who raised his expected trading level to one that is 95 percent lower than its current trading level.
Johnson pushed his Tesla price target from $19.05 to $25.28 on Wednesday, while maintaining the ‘Sell’ rating that has been present on the stock for a long time. GLJ has largely been recognized as the biggest skeptic of Elon Musk’s company, being particularly critical of the automotive side of things.
Tesla has routinely been called out by Johnson for negative delivery growth, what he calls “weakening demand,” and price cuts that have occurred in past years, all pointing to them as desperate measures to sell its cars.
Johnson has also said that Tesla is extremely overvalued and is too reliant on regulatory credits for profitability. Other analysts on the bullish side recognize Tesla as a company that is bigger than just its automotive side.
Many believe it is a leader in autonomous driving, like Dan Ives of Wedbush, who believes Tesla will have a widely successful 2026, especially if it can come through on its targets and schedules for Robotaxi and Cybercab.
Justifying the price target this week, Johnson said that the revised valuation is based on “reality rather than narrative.” Tesla has been noted by other analysts and financial experts as a stock that trades on narrative, something Johnson obviously disagrees with.
Dan Nathan, a notorious skeptic of the stock, turned bullish late last year, recognizing the company’s shares trade on “technicals and sentiment.” He said, “From a trading perspective, it looks very interesting.”
Tesla bear turns bullish for two reasons as stock continues boost
Johnson has remained very consistent with this sentiment regarding Tesla and his beliefs regarding its true valuation, and has never shied away from putting his true thoughts out there.
Tesla shares closed at $431.40 today, about 95 percent above where Johnson’s new price target lies.
Tesla (NASDAQ: TSLA) stock received a price target update from Pierre Ferragu of Wall Street firm New Street Research, citing the company’s growing lead in self-driving and autonomy.
On Tuesday, Ferragu bumped his price target from $520 to $600, stating that the consensus from the Consumer Electronics Show in Las Vegas was that Tesla’s lead in autonomy has been sustained, is growing, and sits at a multiple-year lead over its competitors.
CES 2026 validates Tesla’s FSD strategy, but there’s a big lag for rivals: analyst
“The signal from Vegas is loud and clear,” the analyst writes. “The industry isn’t catching up to Tesla; it is actively validating Tesla’s strategy…just with a 12-year lag.”
The note shows that the company’s prowess in vehicle autonomy is being solidified by lagging competitors that claim to have the best method. The only problem is that Tesla’s Vision-based approach, which it adopted back in 2022 with the Model 3 and Model Y initially, has been proven to be more effective than competitors’ approach, which utilizes other technology, such as LiDAR and sensors.
Currently, Tesla shares are sitting at around $433, as the company’s stock price closed at $432.96 on Tuesday afternoon.
Ferragu’s consensus on Tesla shares echoes that of other Wall Street analysts who are bullish on the company’s stock and position within the AI, autonomy, and robotics sector.
Dan Ives of Wedbush wrote in a note in mid-December that he anticipates Tesla having a massive 2026, and could reach a $3 trillion valuation this year, especially with the “AI chapter” taking hold of the narrative at the company.
Ives also said that the big step in the right direction for Tesla will be initiating production of the Cybercab, as well as expanding on the Robotaxi program through the next 12 months:
“…as full-scale volume production begins with the autonomous and robotics roadmap…The company has started to test the all-important Cybercab in Austin over the past few weeks, which is an incremental step towards launching in 2026 with important volume production of Cybercabs starting in April/May, which remains the golden goose in unlocking TSLA’s AI valuation.”
Tesla analyst breaks down delivery report: ‘A step in the right direction’
Tesla has transitioned from an automaker to a full-fledged AI company, and its Robotaxi and Cybercab programs, fueled by the Full Self-Driving suite, are leading the charge moving forward. In 2026, there are major goals the company has outlined. The first is removing Safety Drivers from vehicles in Austin, Texas, one of the areas where it operates a ride-hailing service within the U.S.
Ultimately, Tesla will aim to launch a Level 5 autonomy suite to the public in the coming years.
Investor's Corner
Tesla Q4 delivery numbers are better than they initially look: analyst
The Deepwater Asset Management Managing Partner shared his thoughts in a post on his website.
Longtime Tesla analyst and Deepwater Asset Management Managing Partner Gene Munster has shared his insights on Tesla’s Q4 2025 deliveries. As per the analyst, Tesla’s numbers are actually better than they first appear.
Munster shared his thoughts in a post on his website.
Normalized December Deliveries
Munster noted that Tesla delivered 418k vehicles in the fourth quarter of 2025, slightly below Street expectations of 420k but above the whisper number of 415k. Tesla’s reported 16% year-over-year decline, compared to +7% in September, is largely distorted by the timing of the tax credit expiration, which pulled forward demand.
“Taking a step back, we believe September deliveries pulled forward approximately 55k units that would have otherwise occurred in December or March. For simplicity, we assume the entire pull-forward impacted the December quarter. Under this assumption, September growth would have been down ~5% absent the 55k pull-forward, a Deepwater estimate tied to the credit’s expiration.
“For December deliveries to have declined ~5% year over year would imply total deliveries of roughly 470k. Subtracting the 55k units pulled into September results in an implied December delivery figure of approximately 415k. The reported 418k suggests that, when normalizing for the tax credit timing, quarter-over-quarter growth has been consistently down ~5%. Importantly, this ~5% decline represents an improvement from the ~13% declines seen in both the March and June 2025 quarters.“
Tesla’s United States market share
Munster also estimated that Q4 as a whole might very well show a notable improvement in Tesla’s market share in the United States.
“Over the past couple of years, based on data from Cox Automotive, Tesla has been losing U.S. EV market share, declining to just under 50%. Based on data for October and November, Cox estimates that total U.S. EV sales were down approximately 35%, compared to Tesla’s just reported down 16% for the full quarter. For the first two months of the quarter, Cox reported Tesla market share of roughly a 65% share, up from under 50% in the September quarter.
“While this data excludes December, the quarter as a whole is likely to show a material improvement in Tesla’s U.S. EV market share.“
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