Tesla profit falls sharply amid backlash over Musk role in Trump administration

Tesla’s first-quarter profits plunged by more than two-thirds amid a backlash against Elon Musk’s electric car company which has damaged sales and sent its stock plunging.

The Texas-based company said quarterly profits fell by 70% to to 409 million dollars, or 12 cents a share – far below analyst estimates. Tesla’s revenue fell 9% to 19.3 billion dollars in the January-March period, also below Wall Street’s forecast.

The results come as the company struggles to sell cars to consumers angry over Mr Musk’s leadership of a federal government jobs-cutting group that has divided the country and sparked protests.

Far-right politics

He also has publicly supported far-right politicians in Europe and alienated potential buyers there.

Many investors have complained that Mr Musk is too distracted with his Trump administration role to be running Tesla and that he should either relinquish his position as CEO or abandon his advisory role in Washington.

Tesla’s stock has fallen more than 40% this year but rose slightly in after-hours trading.

Morningstar analyst Seth Goldstein said earlier reports of plunging sales that had tanked the stock made the results almost predictable.

“They’re not particularly surprising given that deliveries were down,” he said, adding that the company is still generating cash. “It was good to see positive cash flow.”

The company generated 2.2 billion dollars in operating cash versus 242 million dollars a year earlier.

Fierce competition

The firm that once dominated the electric vehicle market is also facing fierce competition for the first time.

Earlier this year, Chinese EV maker BYD announced it had developed an electric battery charging system that can fully power up a vehicle within minutes, and Tesla’s European rivals have begun offering new models with advanced technology that is making them real alternatives, just as popular opinion in Europe has turned against Mr Musk.

Investors expect Tesla will be damaged less by the Trump administration’s tariffs than most US car companies because it makes most of its US cars domestically, but the firm will not be completely unscathed. It sources some materials for its vehicles from abroad that will now face import taxes.

Tesla warned that tariffs will hit its energy storage business too.

“While the current tariff landscape will have a relatively larger impact on our Energy business compared to automotive,” the company said, “we are taking actions to stabilise the business in the medium to long term and focus on maintaining its health.”

Retaliation from China will also damage Tesla. The company was forced earlier this month to stop taking orders from mainland customers for two models, its Model S and Model X. It makes the Model Y and Model 3 for the Chinese market at its factory in Shanghai.