Tesla and Nvidia Face Washington Scrutiny, and Tesla Has More to Lose

Nvidia grew revenue 105.85% to $96.221 billion while Tesla's slipped 0.17% to $28.046 billion — and now both companies sit squarely in Washington's regulatory crosshairs, with Tesla carrying the heavier load.

Both posted strong operating quarters. Tesla reported on October 21, leaning on FSD and Robotaxi. Nvidia reported on August 26, with AI demand exceeding supply. Since then, a midterm blue wave and a CEO scandal have redrawn the regulatory picture for each.

What's driving each company's growth?

Tesla's car sales are flat, so the growth story sits in software. Active FSD subscriptions reached 1.74 million, up from 1.04 million — drivers are paying for autonomy. The CFO put it plainly: "FSD continues to be the key driver for demand."

That push costs money. R&D rose to $2.76 billion, and operating income fell 55.79%. Tesla's operating margin now stands at 4.6%, versus Nvidia's 60.4%.

Nvidia's expansion reaches well beyond the chipmaker itself, with hyperscaler spending driving growth across the suppliers that power, cool and network that infrastructure. CEO Jensen Huang summed it up: "Now, compute is revenue."

The two face different gatekeepers:

• Growth engine: Tesla — Robotaxi and FSD; Nvidia — data center computing and networking
• Who must approve: Tesla — country and state regulators; Nvidia — U.S. export licensing
• Operating margin: Tesla 4.6%; Nvidia 60.4%

Why does Tesla need permission?

After the election, an AV policy expert told Axios that hopes for federal rules overriding state limits "just became a pipe dream." Axios noted that Democrats have cited safety and labor protections. Texas elected a governor who once asked Tesla to delay its Austin launch.

Elon Musk named the threat himself on the earnings call: "unless we are stopped by governments." Traders put the odds of Robotaxis launching in California by year-end at just 3.3%.

Nvidia's problem is different. The company has already removed China from its outlook — its guidance excludes any data center compute revenue from the country. The new risk is governance.

The board is looking into Huang's relationship with Alice Huang, who is affiliated with Megaspeed, an Nvidia customer accused of helping restricted Chinese companies acquire its chips. The Wall Street Journal reports the board is preparing to oust Huang. The stock has fallen 23.24% in a month.

What comes next?

For Tesla, watch for EU-wide FSD approval. Musk said he "would be surprised if it takes longer than Q1." For Nvidia, the question is whether results meet the $108.0 billion revenue outlook without China. Power and shell capacity also limit how fast Nvidia can ship.

Which stock is worse off?

Tesla, by this analysis. Nvidia's problems come down to one executive and one country already excluded from guidance. At about 21 times earnings, Nvidia's valuation leaves room for a leadership change. Near 417 times earnings, Tesla's valuation carries a premium that depends almost entirely on regulators letting driverless cars expand.

If Europe signs off by Q1 and Texas leaves Austin alone, that position would shift. Until then, Nvidia's one-country, one-executive problem looks far more contained than Tesla's fifty-state approval gauntlet.