Tesla has reported a steep 71% decline in quarterly profit, underscoring continuing struggles tied to slumping vehicle sales and growing public backlash against CEO Elon Musk. The electric vehicle maker disclosed a net income of $409 million on revenue of $19.3 billion for the first quarter, down dramatically from earnings recorded during the same period last year. This sharp decrease coincided with Tesla’s weakest quarterly performance in terms of vehicle deliveries in over two years, coming soon after its first year-over-year sales drop.
In its earnings report, the company expressed caution about the ramifications of ongoing trade tensions, highlighting that intensified tariffs and shifting political climates—particularly those aimed at China—may further dampen demand. Tesla expects these external forces to have a “meaningful impact” on product interest, particularly affecting the company’s energy business, which could suffer more significantly than its automotive segment. Executives emphasized ongoing measures to stabilize the business and maintain financial strength in the medium to longer term.
Tesla is confronted with multiple headwinds beyond trade concerns. Its current lineup has grown increasingly dated, although recent cosmetic updates have been applied across its sedans and SUVs. Meanwhile, the highly anticipated Cybertruck has failed to achieve the level of consumer excitement predicted by Musk. Additionally, Tesla’s planned lower-cost offering—reportedly a stripped-down version of the Model Y—has fallen behind schedule, facing months-long delays.
Beyond its vehicles, Tesla continues to pour resources into ambitious ventures such as Robotaxi services and the humanoid Optimus robot. Musk has pledged an initial rollout of Robotaxi fleets in Austin by June, with potential expansion into additional cities later this year, though specific operational details remain scarce. An internal Tesla analysis recently suggested that even under ideal conditions, the Robotaxi initiative could operate at a loss for an extended period. Despite Musk’s repeated assurances, the company has yet to demonstrably achieve fully autonomous driving, casting doubt on optimistic timelines.
Last year, Tesla also encountered significant financial setbacks, recording a 55% drop in profit to $1.13 billion for the first quarter of 2024 relative to the same quarter a year prior. The decline was attributed largely to aggressive price cuts and unforeseen circumstances. Although efforts in subsequent quarters showed moderate improvements, profits continued their downward trajectory, underscoring persistent challenges that have placed increased pressure on Tesla’s profit margins and market standing.
