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Tesla reported a sizable drop in profit and revenue Tuesday and warned that the political environment along with the Trump administration’s tariff plans were challenges for its business.
CEO Elon Musk has faced a swell of opposition for his work with President Donald Trump, which has made Tesla a growing target for protests and even vandalism. Musk has acknowledged that his move into politics has hit the company’s stock price.
Tesla — which is increasingly trying to diversify into high-tech products like robots — said profits fell 71% to $409 million, compared with $1.39 billion during the same quarter one year ago.
Shares of Tesla rose almost 4% in after-hours trading, though the company has lost 50% of its value from its mid-December peak.
It said that “uncertainty in the automotive and energy markets” associated with “rapidly evolving trade policy,” along with “changing political sentiment,” could have “a meaningful impact on demand for our products in the near-term.”
It also said updates to its best-selling Model Y that affected its availability on the market contributed to the shortfall.
“We remain committed to expanding our business model to include delivering autonomous robots across multiple form factors and use cases — powered by our real-world AI expertise — to our customers and for use in our factories, as we navigate these headwinds,” it said.
It said it was not prepared to provide guidance for performance the rest of the year — a decision other companies are also making — because of broad trends that include the impact from tariffs. It said it would “revisit” guidance for 2025 in three months.
“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 the outlook section of its report.
Musk faces pressure from many sides, including from investors who would like him to pay more attention to the company and from his job in the Trump administration, where he has volunteered to slash government programs.
Musk has kept his CEO roles at Tesla and SpaceX even while he has spent much of his time with President Donald Trump and his Department of Government Efficiency, the group charged with reducing federal spending.
A CNBC All-America Economic survey released earlier Tuesday underscored the depth of the negative sentiment toward Tesla and Musk: 47% of the public had negative views of the company versus 27% positive, and half had negative views of Musk, compared with 36% who saw him positively.
“Tesla has become a political symbol around the world,” Daniel Ives, managing director at Wedbush Securities, said in an interview on CNBC after the earnings report was released.
Ives said the political controversy has hurt Tesla not only by reducing demand for vehicles but also because Tesla has become a target for retaliatory tariffs by other nations, such as China.
The earnings report did not explicitly mention the repeated vandalism against Tesla vehicles or the peaceful protests at its showrooms, instead citing the “changing political sentiment” as a headwind for demand.
A key question for Tesla, Musk and the Trump administration is how long Musk will remain in his White House position. His job as a “special government employee” is time-limited by law to 130 days during any period of 365 consecutive days, which could put his legally mandated endpoint as early as late May. Musk told Fox News this month that he believed “most” of his work would be done by the deadline.
A conference call with Wall Street analysts was scheduled for 2:30 p.m. ET. Musk sometimes joins such calls, but not always.
This is a developing story. Check back for updates.
