On Tuesday, Tesla disclosed earnings that fell short of expectations, with first-quarter profits plummeting by 71% due to a significant decrease in electric vehicle sales. This outcome aligns with recent developments involving Tesla’s CEO, Elon Musk, who has been notable for his support of President Donald Trump and his promotion of far-right ideologies on his social media platform, X.
During an earnings call, Musk attempted to portray a more optimistic outlook for the company. However, his tone was subdued as he discussed the introduction of autonomous taxi rides in Texas this June. He noted that these services would not feature the anticipated Cybercab vehicles but instead utilize Tesla Model Ys, a revelation that may disappoint some who hoped for a novel development.
Tesla recorded $19.3 billion in revenue for the first quarter, marking a 9% decline from the same period the previous year. The company produced 362,000 vehicles and delivered more than 336,000 units, with deliveries of the Model 3 and Model Y decreasing by 12%. While official figures for the Cybertruck are not provided, the category that includes the Cybertruck experienced a 24% drop, possibly due to its strong association with Musk’s controversial public image.
The Cybertruck began deliveries in late 2023, following a period during which Musk expressed certain racist and antisemitic views. This has possibly influenced consumer perceptions, with some assuming that Cybertruck owners align with Musk’s personal agenda. Conversely, owners of Model 3 and Model Y vehicles might be viewed more leniently, as these models were introduced before Musk’s more recent controversial public associations.
In terms of earnings, Tesla reported an adjusted earnings-per-share of 27 cents, below analysts’ expectations of 41 cents. A positive note was the $595 million revenue from carbon credits, which are payments from traditional car companies to offset their pollution. Without these credits, Tesla would have faced an operating loss for the quarter.
According to the Wall Street Journal, Tesla might face high tariffs if current policies on import taxes persist. Despite manufacturing vehicles in California and Texas, many parts are imported and subjected to 25% tariffs. On the earnings call, Musk reiterated his opposition to tariffs, emphasizing his role as merely an advisor to the president rather than a policymaker.
Musk often tries to offset negative news with bold announcements. For example, in April 2024, Reuters reported Tesla’s shift away from producing a long-anticipated $25,000 vehicle, leading Musk to announce plans for a robotaxi, which faced delays. The unveiling of this service, featuring some questionable demonstrations, was underwhelming. Musk assured that fully autonomous taxi rides would commence in Austin, Texas, by June, utilizing Model Ys.
The Tuesday earnings call was less hyped than usual. While Musk proposed that the Optimus robots would be operational in Tesla factories by the end of 2025, his overall demeanor was less enthusiastic, lacking the typical promotional flair.
Tesla has faced protests at dealerships and showrooms nationwide since Musk launched the Department of Government Efficiency (DOGE). These demonstrations, sometimes involving vandalism, have led to federal terrorism charges for some individuals. Musk claimed that the protests are highly organized and financially backed, a claim he has made previously without supporting evidence. Musk announced he would step back from DOGE after May but would remain in the government for the duration of Trump’s term.
Over his brief tenure in government, Musk has played a role in dismantling essential services and unlawfully dissolving the United States Agency for International Development. DOGE has been implicated in the layoffs of over 280,000 employees across 27 government agencies. Despite lacking legal authority for many actions, Musk has proceeded with what he describes as cost-cutting measures.
Reports indicate that DOGE has not substantially reduced federal spending, which primarily involves the U.S. military, Medicare, Medicaid, and Social Security. Although some measures propose cuts at the Pentagon to fund projects like the Golden Dome missile defense program, any reductions to programs such as Social Security are impacting service wait times for seniors. Further budget reductions remain uncertain amid ongoing legislative discussions.
Musk, in collaboration with Trump, has positioned this movement as a transformative revolution, yet it faces criticism for undermining government functions, possibly influencing consumers to reconsider purchasing Tesla vehicles.
