Tesla Motors operating profit plummets by two thirds

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If Tesla Motors does its job well, it will become by far the most valuable company in the world, says CEO Elon Musk. “As valuable as the next five most valuable companies combined.” Enough professional investors apparently believe this. Although operating profit slumped by two thirds in the first quarter of 2025, enough professional investors are betting on Tesla's prosperity. The share price rose to around 250 US dollars in after-hours trading. At the time of Donald Trump's second inauguration three months ago, the share price was around 425 dollars.

The Tesla factories are anything but working to capacity. They could produce more than 600,000 vehicles per quarter, and two more factories are under construction. In fact, Tesla produced 362,615 electric cars in the first three months of the year, a decline of 16 percent compared to the first quarter of 2024. The last time Tesla's vehicle production was lower was ten quarters earlier. Tesla delivered 13 percent fewer cars, despite reduced prices and a significant increase in leasing.

This has an impact on finances. Revenue from the sale of electric vehicles fell by a good 21 percent to 12.9 billion US dollars. Leasing income fell by six percent to 447 million dollars. Revenues from the sale of emission certificates (+35% to 595 million dollars), from the sale of solar cells and batteries (+67% to 2.9 billion dollars) and from services and other ventures (+15% to 2.6 billion dollars) increased.

In total, Tesla's quarterly turnover fell by a good nine percent to 19.3 billion dollars. At the same time, the margin deteriorated, causing operating profit to plummet by two thirds to 399 million dollars. The pre-tax profit of 589 million dollars represents a decline of 69 percent. Of this, 400 million dollars did not come from the actual business, but from interest income. Net profit fell by a good 70 percent to 420 million dollars. This is according to the quarterly figures published on Tuesday evening.

Musk remains loyal to Trump

The background to the business development is the close connection between the Tesla Motors brand and its boss Elon Musk. The richest man in the world has dedicated himself to destroying large parts of the US federal public administration. He has donated hundreds of millions of dollars to Donald Trump's election campaign and now heads DOGE, the Department of Government Efficiency. This has led to individual acts of sabotage and numerous demonstrations at Tesla locations.

Musk plays down the citizens' movement. “Those who have received lavish dollars and fraudulent dollars will attack me and everything associated with me,” the multi-billionaire said in the usual conference call with financial analysts. Still, Musk vows to continue his work at DOGE, likely for Trump's entire term, or as long as the president wishes. From May, Musk wants to reduce his commitment to DOGE to one or two days a week. He will then be able to devote significantly more time to Tesla.

The close relationship with Trump is also hurting Tesla abroad. In response to the new tariffs that Trump has imposed on all countries except Russia and North Korea, various governments are targeting Musk's companies Tesla Motors and SpaceX. Existing contracts are being terminated, procurement is being realigned and subsidies are being cut. For example, the provinces and territories of Canada have excluded Tesla's products from subsidies and Starlink contracts are being partially canceled.

No forecast due to Trump's tariffs

The current financial situation of his car company is not life-threatening, says Musk, but “there are some challenges”. This year will be turbulent. In particular, Trump's unstable tariff policy is causing problems, which is affecting Tesla's electricity division even more than the automotive division.

“Uncertainty in the automotive and energy markets continues to increase as rapidly changing trade policies adversely affect the global supply chain and cost structure of Tesla and its competitors,” Tesla's documents published on Tuesday state, “This development, combined with the changing political mood, could have a significant impact on near-term demand for our products.” The situation is so uncertain that Tesla is unable to provide a business forecast.

Tesla drivers should soon be allowed to sleep

Musk himself wants free trade and lower tariffs, as these are fundamentally beneficial for prosperity. But that is a decision for the US President. Nevertheless, Musk predicts a golden future for his company: Teslas will be able to drive autonomously in many US cities this year, without human supervision. All vehicle occupants would then be able to sleep while driving, Musk promised. “There will be millions of autonomously driving Teslas in the second half of next year.”

In the long term, he expects the car market to change fundamentally: “In the future, most people won't buy cars,” says Musk, although this would not change the current situation. Musk assumes that sales of non-self-driving cars with combustion engines in particular will decline: “It's like riding a horse with a flip phone. Some people do that, but it's not common.”

Incidentally, in Elon Musk's prediction, the ten most valuable companies in the world will all be Chinese – except for Tesla Motors, which is ranked at number 1, of course.

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