Tesla Profit Falls 71%, Hurt by Backlash

BY SEAN MCLAIN

Tesla’s net income slid 71% in the first quarter, as the company struggled to overcome competitive pressure overseas and a reputational hit from Chief Executive Elon Musk’s polarizing role in the Trump administration.

Musk said he would be devoting significantly less time to his cost-cutting work at the White House starting next month, but struck a defiant tone against critics. “I believe the right thing to do is to fight the waste and fraud and try to get the country back on the right track,” Musk said on a call with analysts after the earnings report on Tuesday.

The electric-vehicle maker reported adjusted earnings per share of 27 cents, which missed analysts’ expectations of 41 cents.

Tesla said shifting trade policies, exacerbated by the administration’s tariff regime, are stressing supply chains

while adding to the automaker’s costs. Tesla imports some of its battery cells from China, but said it was looking to source them from the U.S.

The trade fight and “changing political sentiment” could weigh on demand for its vehicles, the company said, leading it to potentially revisit its sales forecast for the year. Tesla previously said it expected vehicle sales to rise this year, after reporting a rare drop in 2024.

Musk sighed deeply on Tuesday’s call before addressing the Trump administration’s trade war. The CEO said he advocated for lower tariffs and would continue to do so.

“I just want to emphasize that the tariff decision is entirely up to the president of the United States,” Musk said. “Whether he will listen to my advice is up to him.”

Tesla shares were up more than 3% in after-hours trading on Tuesday, after gaining 4.6% ahead of the first-quarter report. Analysts attributed the rise to investors taking comfort in Tesla reaffirming plans to launch more affordable models later this year.

The company’s first-quarter revenue fell after a steep decline in auto sales, including double-digit percentage drops in crucial markets such as the U.S., China and Germany.

The drop in vehicle sales and weaker selling prices— dented by more-generous sales promotions—hurt revenue and the bottom line, Tesla said. It cited several weeks of lost production time across its four factories to prepare for the recent launch of a retooled Model Y, its top seller.

Larger investments in arti-ficial intelligence weighed down profit. Musk has said autonomous cars and other AI innovations are central to Tesla’s growth prospects.

Even before Musk’s entrance into partisan politics sapped some of the brand’s goodwill among consumers, Tesla was contending with slowing demand for its vehicles. The company has long touted the potential of its nonautomotive businesses as a way to expand the company beyond the core car business.

The sharp quarterly sales and profit declines masked an otherwise bright spot in Tesla’s energy-storage and software-subscription businesses, which had double-digit growth in the first quarter.

The next step for Tesla is the launch of its fleet of robotaxis, which Musk has compared to a combination of Uber and Airbnb. The company said it was on track to launch its first driverless taxi service in Austin, Texas, in June.

Still, Tesla reported $19.3 billion in revenue for the quarter, down 9% compared with the same period last year. Revenue from the company’s auto business fell 20%. The energy business grew 67%.

Tesla reported $595 million in revenue from other auto--makers who pay Tesla for car bon credits to offset their sale of conventional vehicles, up sharply from a year earlier.

The company reported a 2.1% operating margin for the quarter, compared with 5.5% a year earlier.

Tesla’s global vehicle deliveries fell 13% in the first quarter, partly because of a consumer backlash against the brand in response to Musk’s role as President Trump’s cost-cutting czar. Tesla faced protests across the U.S. and Europe, and some of its stores and charging stations were vandalized or even set on fire.

Some analysts have said customers likely delayed purchases as they waited for the recent introduction of a refreshed version of Tesla’s Model Y, the company’s top seller.

Tesla is contending with 25% tariffs imposed on auto imports. While Tesla builds its U.S.-sold cars in Texas and California, the company relies on neighboring countries for components, including Mexico, which supplies more than 20% of its parts, according to federal data.

Estimates from third-party research providers show significant sales declines in some of Tesla’s biggest markets, including California and China. The company doesn’t disclose delivery figures by model or region.

In California, the nation’s largest EV market, Tesla’s first-quarter market share fell to 44% of all zero-emission vehicle registrations in the state, from 56% a year earlier, according to the California New Car Dealers Association.

Tesla shipments fell about 22% in the quarter in China, while its deliveries sank 62% in Germany, according to industry trade groups.

To spur sales, Tesla in April released a less-expensive version of the Cybertruck, priced at $69,990, with low-cost features including fabric seats. The company is also developing a lower-cost version of its Model Y.