this post was submitted on 09 May 2025
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Things at Tesla are worse than they appear (edition.cnn.com)
submitted 4 days ago by technocrit@lemmy.dbzer0.com to c/technology@lemmy.world
92 comments fedilink hide all child comments
 

Things are undoubtedly bad at Tesla. Its sales are dwindling. Its profits are plunging, as is its share price. There are regular protests outside its showrooms. The Cybertruck is a flop. And somehow, it’s actually a lot worse than that.

The 71% drop in net income it just reported may have been overshadowed by CEO Elon Musk’s announcement that he would be stepping back from his controversial duties at the Department of Government Efficiency (DOGE). But that drop is just one indication of serious financial sickness at the EV maker, problems brought on by falling sales for the first time in its history and falling prices for electric vehicles.

The bottom line problem at Tesla is its vanishing bottom line. A deeper look at its first quarter report shows it’s now losing money on what should be its ostensible reason for existence – selling cars.

It was only able to post a $409 million profit in the quarter thanks to the sale of $595 million worth of regulatory credits to other automakers.

But if the Trump administration gets its way, the company can kiss those regulatory credits keeping it in the black goodbye, too.

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[–] NotMyOldRedditName@lemmy.world 1 points 2 days ago* (last edited 2 days ago)

The article doesn't say they've never made a profit on any of their cars. If that's what you got from that, you should try reading it again.

Also, if you make 1 billion in profit on something, and then spend 2 billion researching and developing and setting up a factory to build a new product, you end up with a loss of 1 billion. That does not mean your first thing is unprofitable. This is pretty basic stuff.

The vehicles are profitable, they just didn't provide enough profit this quarter to cover their R&D and capital expenditures for growth.

Edit: Sorry, and in case it wasn't clear, their R&D and capital expenditures dwarf the ZEV credits every quarter.