Tesla Vs. Nvidia: Two Visionary Leaders, Similar Challenges, Sharply-Contrasting Outcomes
Tesla is licking its wounds after a weak Q3 earnings print. Revenues grew nearly 12%, reversing two consecutive periods of decline. But the sales rebound looks inflated, with demand pulled forward as customers rushed to capture expiring EV tax credits.
Tesla’s third-quarter revenue hit $28.1 billion, comfortably exceeding the $26.4 billion forecast. Automotive revenue rose 6% to $21.2 billion, from year-ago $20 billion. Profit, however, told a harsher story. Tesla reported adjusted earnings of 50 cents per share, missing the 54-cent estimate. Net income declined 37% to $1.37 billion, or 39 cents per share, compared with $2.17 billion, or 62 cents, a year earlier. The sharp drop in profitability is attributed to a 50% surge in operating expenses, much of it tied to AI and other research and development initiatives.
Regulatory credit revenue fell 44% to $417 million from year-ago $739 million. Regulatory credits are rewards for Tesla for producing electric vehicles (EVs) that have zero emission. Tesla monetizes its regulatory credits by selling to traditional automakers that can’t meet their emission quotas.
The quarter marked the abrupt end of federal tax credits for electric vehicles, which expired at the close of September under a new law signed by President Donald Trump in July. The legislation ended federal tax credits of up to $7,500 for new EVs and $4,000 for used EVs.
The incentives were originally scheduled to last until 2032 under the Inflation Reduction Act of 2022 (IRA). The retroactive elimination prompted a rush of consumer purchases before the deadline and left the market bracing for a slowdown in subsequent quarters. While the immediate effect was a temporary lift in Tesla’s U.S. sales, it was essentially a borrowing of demand from future quarters.
The decision to end the EV credits well before time may have been shaped by the acrimonious relationship between Trump and Tesla chief executive Elon Musk. What was once a brewing bromance devolved into open hostility and public insults, effectively collapsing the rapport in May-June of this year. The ugly spat began with Elon Musk criticizing the Trump administration’s “One Big Beautiful Bill” – a new tax and spending bill proposed by Trump. In characteristic fashion, the president struck back forcefully and Musk’s unfiltered comments seem to have hardened that stance.
Trump has a history of reacting sharply and then reconsidering his position, a pattern that Wall Street has dubbed as the basis of TACO trades, by which investors profit from his policy reversals.
The President even sought to justify Musk’s outburst, acknowledging that Musk was frustrated by the removal of EV subsidies and mandates that could hurt Tesla’s business. Had Musk exercised more restraint, there is a reasonable likelihood that the administration might have delayed or somewhat softened its decision to end EV credits. Instead, Musk’s combative posture appears to have worsened the policy outcome, with consequences extending well beyond Tesla to the broader EV industry.
Elon Musk’s infamous quotes:
June 3, The first cracks in the bromance, when Musk criticized Trump’s Beautiful bill : “I’m sorry, but I just can’t stand it anymore. This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination. Shame on those who voted for it: you know you did wrong. You know it.” – (Pork is a term in U.S. politics used to describe government spending seen as wasteful or politically motivated — typically funding directed to specific constituencies or local projects to curry favor or votes.)
Accusing Trump of “ingratitude”: “Without me, Trump would have lost the election.”
Expanding criticism from Beautiful Bill to Trump’s trading policy: “The Trump tariffs will cause a recession in the second half of this year.”
Making a serious public allegation: “Time to drop the really big bomb: @realDonaldTrump is in the Epstein files. That is the real reason they have not been made public. Have a nice day, DJT!” – This post on X, was later deleted by him. (Epstein was a convicted sex offender, who ran a vast network exploiting underage girls. His high-profile connections in politics, business, and entertainment fueled controversy after his death in jail in 2019.)
Damage control a week later: “I regret some of my posts about President @realDonaldTrump last week. They went too far.” (This was widely perceived as a tactical retreat, after Musk realized his fallout with the president could hurt his business interests.)
Between June 3 and June 5, Tesla stock erased 17% of its value, but began to recover after Musk expressed contrition on June 11.
The episode is a reminder that even a visionary enterprise is not immune to the cost of intemperance. Tesla’s performance is now as much a reflection of Washington’s shifting sentiment as it is of its technological prowess.
The lesson for business leaders is pretty straightforward: watch your mouth if that’s where your money goes.
Nvidia as a Counterexample
Contrast Tesla with Nvidia, another tech giant facing complex political and regulatory landscapes. Jensen Huang’s leadership remains Nvidia’s greatest asset. Under his prowess, Nvidia has navigated the U.S.-China trade tensions, and export restrictions, with pragmatism and restraint.
China has been a key market for Nvidia, representing $17 billion or 13% of Nvidia’s sales for the fiscal year that ended in January. But Nvidia’s market share in the region has weakened from 95% before 2022 to just 50% after U.S. regulators tightened restrictions on selling high-end AI chips to China over national security concerns. Instead of resisting policy constraints, Nvidia adjusted swiftly by introducing the H20, a watered-down version of its H100 GPU designed for U.S. compliance — demonstrating its agility in navigating complex regulations.
When the H20 was also effectively blocked, Huang described the ban as “deeply painful,” and his pragmatic leadership was on display repeatedly: He lobbied effectively to ease U.S. restrictions on H20 chip exports. Huang framed the discussion around America’s AI leadership, patiently persuading the administration that the modified H20 posed no national security risk and cautioning that U.S. dominance in AI could be compromised without a rethink of export rules.
He was quoted saying:
- “We ought to go and give American companies the opportunity to compete in China, offset the trade deficit, generate tax income for the American people, build, hire jobs, create more jobs”
- “The world is right now hungry, anxious to engage AI. Let us get the American AI out in front of everybody right now.”
- “The Chinese market is large. They’ve got a billion users, and so it’s not a market that you could easily decide to walk away from if your ultimate goal is for America to win the AI race.”
- “If America, the American tech stack, is 80% of the world, then we are doing a good job winning the AI race. If the United States is 20% of the world, then we’ve lost the AI race.”
Huang walked a fine line between appeasing policymakers and advancing Nvidia’s goal of selling in China. The Trump administration eventually relented after Huang’s disciplined, behind-the-scenes engagement. Nvidia regained limited access to the Chinese market, without theatrical social media outbursts. Huang even agreed to give 15% of H20 sales to the U.S. government without batting an eyelid.
After having crossed the U.S. roadblocks, Huang accepted China’s subsequent rejection of Nvidia’s H20 and RTX Pro 6000D chips with composure. Chinese regulators have reportedly directed companies like Alibaba and ByteDance to cancel orders for Nvidia’s RTX Pro 6000D processors – another tailor-made chip for China. Huang admitted he was “disappointed” with China sidelining its AI chips, but struck a pragmatic tone by saying Washington and Beijing “have larger agendas to work out… we’re supportive of both governments as they sort through these geopolitical policies.”
Instead of dwelling on the setback, Nvidia shifted strategy – assuming a “China zero” baseline in financial guidance and treating any China-related sales as potential upside rather than expectation.
The recent U.S. approval to sell AI chips to the UAE drove Nvidia stock to new highs. Tesla shares are up just 7% year-to-date vs. Nvidia’s nearly 40% rally. Tesla has a market cap of 1.4 Trillion, less than a third of Nvidia’s $4.5 trillion.
The difference is clear: where Musk’s volatility creates a “headline risk” that affects Tesla’s market perception, Huang’s composure builds strategic leverage. The market has clearly shown that leadership today is as much about managing relationships and tone as it is about innovation and execution.
Please note that I am not a registered investment advisor and readers should do their own due diligence before investing in this or any other stock. I am not responsible for the investment decisions made by individuals after reading this article. Readers are asked not to rely on the opinions and analysis expressed in the article and encouraged to do their own research before investing