Elon Musk Vows to Spend Less Time in Washington as Tesla’s Profit Drops 71%

 

Elon Musk Vows to Spend Less Time in Washington as Tesla’s Profit Drops 71%

 

The carmaker reported the sharp decline in quarterly earnings after its brand suffered because of its chief executive’s role in the Trump administration.

 

Jack Ewing

By Jack Ewing

April 22, 2025

https://www.nytimes.com/2025/04/22/business/tesla-earnings-elon-musk.html

 

Elon Musk, Tesla’s chief executive, said on Tuesday that he would spend less time in Washington working for President Trump after the automaker reported a profit drop of 71 percent in the first three months of the year.

 

Mr. Musk told Wall Street analysts in a conference call that he would continue to spend “a day or two per week” on Washington matters, probably for the duration of Mr. Trump’s presidency. The billionaire executive is one of Mr. Trump’s closest confidants and has played a leading role in the president’s efforts to slash government spending and cut tens of thousands of federal government jobs.

 

He spoke less than two hours after Tesla said it had earned $409 million, down from $1.4 billion in the first quarter of 2024. The company previously reported net profit of $1.1 billion last year, but revised the figure to reflect changes in the way cryptocurrency assets are valued.

 

Tesla sales have been slumping because of intense competition from Chinese carmakers like BYD, a lack of new models and Mr. Musk’s support of far-right causes, which has turned off some liberals and centrists from buying Tesla vehicles.

 

Mr. Musk said recent protests at Tesla showrooms around the world had been conducted by people who stood to lose government handouts because of his work with the Trump administration. “The real reason is that those who are receiving the waste and fraud wish it to continue,” he said.

 

Tesla remains the most valuable automaker in the world as measured by its stock price, and it sells far more electric vehicles in the United States than any other company.

 

But its shares have lost about half their value since mid-December as investors have grown more pessimistic about the company’s prospects and concerned about Mr. Musk’s role in the Trump administration. Some investors and analysts have recently called on Mr. Musk to spend more time managing Tesla and limit or end his work for the Trump administration.

 

Even if he does spend less time on administration duties, however, his attention will remain divided. That’s because Mr. Musk also runs SpaceX, the social media site X, an artificial intelligence company called xAI and other businesses.

 

The earnings were well below Wall Street’s expectations. Tesla would have lost hundreds of millions of dollars had it not earned $400 million in interest on cash and investments and $595 million from selling credits to other carmakers that failed to meet emissions regulations that Mr. Trump has pledged to eliminate.

 

Tesla shares rose about 5 percent in extended trading after the company released its quarterly earnings.

 

“This is the worst performance I’ve seen in Tesla’s history,” Ross Gerber, the chief executive of Gerber Kawasaki, an investment firm, said on X.

 

Tesla declined to offer a forecast for sales and profits for the rest of the year, as is customary, saying there was too much economic uncertainty.

 

“It is difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains, our cost structure, and demand for durable goods and related services,” Tesla said in a report to shareholders.

 

In what may have been an oblique acknowledgment of the damage that Mr. Musk has done to Tesla’s reputation, the company referred to “changing political sentiment” that it said “could have a meaningful impact on demand for our products in the near term.”

 

Tesla has steadily lost market share to Chinese carmakers and more established automakers, like General Motors, Volkswagen and Hyundai, that have been offering a growing selection of electric vehicles.

 

Mr. Musk’s company once hoped to sell 20 million vehicles a year by the end of the decade, twice as many as Toyota. But sales have been sliding after climbing to 1.8 million in 2023. Last year, the company sold 1.7 million cars, and its global sales fell 13 percent in the first quarter of 2025 from a year earlier.

 

Tesla executives on Tuesday attributed much of the sales decline to production slowdowns as the company reworked assembly lines to build a new version of the Model Y sport utility vehicle.

 

The Cybertruck, Tesla’s newest vehicle, which consumed a lot of the company’s resources while it was being developed, is looking increasingly like a flop. Sales of the Cybertruck in the first quarter were down about 50 percent from the last three months of the year, according to Cox Automotive, a research firm.

 

Tesla’s website has recently offered discounts of as much as $8,500 on Cybertrucks in the company’s inventory. The truck starts at $70,000 before federal and state incentives.

 

The automaker reiterated that it would begin producing a lower-cost vehicle by the end of June that would make it possible for more people to afford an electric vehicle and potentially revive sales. But the company has not displayed a prototype or provided many details about the car.

 

Analysts doubt whether the new vehicle will be available in significant numbers anytime soon. It is also not clear whether the car will be a new design or simply a stripped-down version of Tesla’s Model 3 sedan or Model Y.

 

Tesla said Tuesday that the vehicle “will utilize aspects of the next generation platform as well as aspects of our current platforms and will be produced on the same manufacturing lines as our current vehicle lineup.”

 

Mr. Musk’s role at the federal office called the Department of Government Efficiency, which has slashed the budgets of federal agencies and cut thousands of jobs, has made him a lightning rod. Activists have protested outside Tesla dealerships around the world, and Tesla vehicles have been vandalized or even burned.

 

Tesla is probably less vulnerable to Mr. Trump’s tariffs on autos and parts than other carmakers because its factories in California and Texas make all the vehicles that it sells in the United States. The company also has car factories in Shanghai and near Berlin, which serve much of the rest of the world.

 

But Tesla will also suffer. Its U.S. factories use parts imported from Mexico and China that will be subject to tariffs, forcing the company to raise prices or take in lower profits.

 

Mr. Musk said on Tuesday that he had not been able to dissuade Mr. Trump from imposing tariffs on cars that would also hurt Tesla. “I will continue to advocate for lower tariffs rather than higher tariffs, but that’s all I can do,” he said.

 

On the call with analysts, Mr. Musk said, as he had before, that Tesla’s future was in artificial intelligence technology that would allow the company’s vehicles to drive themselves without human intervention, enabling fleets of “Cybercabs” to make money ferrying customers.

 

But Tesla has not yet perfected the technology and faces competition in that nascent business from several Chinese companies and Waymo, a unit of Alphabet, the parent company of Google.

 

Waymo’s autonomous cars have offered paid rides for several years in Phoenix and San Francisco and are expanding to more places. Last month, Waymo said it was completing about 200,000 paid rides every week in four cities and announced plans to expand to Washington. It is also testing its cars in Tokyo.

 

Some analysts doubt whether Tesla autonomous vehicles will ever generate the trillions of dollars in revenue that Mr. Musk has said they would. Uber, which has been offering paid rides for 15 years and is working with Waymo in Austin, Texas, reported revenue of $12 billion in 2024.

 

Jack Ewing writes about the auto industry with an emphasis on electric vehicles.