2 weeks ago
Elon Musk is to devote more time to Tesla from next month after the carmaker reported a plunge in Q1 profit.
Tesla reported on Tuesday (Apr 22) that quarterly profits fell by 71% to to 409 million dollars (£308m), or 12 cents a share – far below analyst estimates.
Revenue fell 9% to 19.3 billion dollars (£14.5bn) in the January-March period, below Wall Street’s forecast.
Tesla’s stock has fallen more than 40% this year but rose slightly in after-hours trading.
The disappointing results come as the company struggles to sell cars to consumers angry over Musk’s role in the Trump administration. He has also publicly supported far-right politicians in Europe and alienated potential buyers there.
Some investors have complained he is too distracted by his role at the Department of Government Efficiency (Doge) to be running Tesla and that he should either relinquish his position as CEO or abandon his advisory role in Washington.
Morningstar analyst Seth Goldstein said earlier reports of plunging sales that had tanked the stock made the results almost predictable.
‘They’re not particularly surprising given that deliveries were down,’ he said, adding that the company is still generating cash. ‘It was good to see positive cash flow.’
The company generated 2.2 billion dollars (£1.6bn) in operating cash versus 242 million dollars (£182m) a year earlier.
Tesla investors will be listening closely for updates on several strategic initiatives.
The company is expected to roll out a cheaper version of its best-selling vehicle, the Model Y SUV later in the year. Tesla has also said it plans to start a paid driverless robotaxi service in Austin in June.
Its closely watched gross margins fell to 16.3% from 17.4%.
The company that once dominated the electric vehicle market is also facing fierce competition for the first time.
Earlier this year, Chinese EV maker BYD announced it had developed an electric battery-charging system that can fully power up a vehicle within minutes, and Tesla’s European rivals have begun offering new models with advanced technology that is making them real alternatives, just as popular opinion in Europe has turned against Musk.
Investors expect Tesla will be damaged less by the Trump administration’s tariffs than most US car companies because it makes a large number of US cars domestically, but Tesla will not be completely unscathed. It sources some materials for its vehicles from abroad that will now face import taxes.
Tesla warned that tariffs will hit its energy storage business too.
The company side business of selling ‘regulatory credits’ to other car makers that fall short of emission standards boosted results for the quarter.
The company generated 595 million dollars (£448m) from credit sales, up from 442 million dollars (£333m) a year ago.
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