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Tesla’s first-quarter profit dropped 39 per cent as sales of its electric vehicles have plummeted owing to a weak product line-up and a worldwide consumer backlash to Elon Musk’s increased involvement in US politics.
Musk has come under investor pressure to address his absence from Tesla as well as the perceived brand damage from his close relationship with US President Donald Trump and his controversial role as head of the so-called Department of Government Efficiency (Doge).
His political interventions have also hurt sales in big European markets this year. Tesla is banking on a revival in vehicle demand following the recent upgrade to its flagship Model Y car. Investors are also awaiting details on a new affordable vehicle it has promised.
Adjusted net income for the first quarter fell 39 per cent from a year earlier to $934mn, missing analyst expectations for $1.5bn, according to a filing from the Austin, Texas-based company on Tuesday. Revenue fell 9 per cent to $19.3bn, missing the average $21.4bn analyst estimate, according to S&P Capital IQ.
Earlier this month, Tesla reported that its deliveries fell 13 per cent in the first three months of this year, compared with a year before, marking its worst quarter since 2022. It also lost its crown as the world’s largest electric-vehicle maker to Chinese rival BYD. Tesla’s share price has halved from its high in mid-December.
The group also faces growing risks from Trump’s trade war, which it has warned could make it a target for retaliatory tariffs and increase the cost of making vehicles in America.
Tesla assembles all of its vehicles sold in the US locally but it is still exposed to the sweeping tariffs and disruptions to the global automotive supply chain since it sources components from other markets.
“While the current tariff landscape will have a relatively larger impact on our energy business compared to automotive, we are taking actions to stabilise the business in the medium to long-term and focus on maintaining its health,” Tesla said in the earnings filing.
Musk has also clashed with Peter Navarro, the architect of Trump’s trade policies, and the White House has said his government role, which was originally meant to continue into 2026, could end well before that once his work with Doge is complete.
Tesla’s first-quarter operating margin also fell to 2.1 per cent from 5.5 per cent a year earlier.
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