Tesla is in Major Trouble, and It's Worse Than You Think
It's been a rough few weeks for Tesla as its stock price has plummeted, its sales have dwindled, and its profits have been slashed. And it doesn't look like things are going to get any better anytime soon, either.
In an article titled "Tesla is in worse shape than you think," Chris Isidore of CNN Business pointed out that Tesla does not seem to be even making money on its cars anymore, at least in a way that would sustain it for the future.
In the first quarter, as Isidore points out, the company posted a $409 million profit. However, that number included the sale of $595 million worth of regulatory tax credits to other automakers. That's a problem, because the Donald Trump presidential administration has made it clear that it wants to eliminate those tax credits.
Without those tax credits, which have accounted for $8.4 billion in revenue since the start of 2021 alone, Tesla would have posted a loss of about $186 million in the first quarter of the year.
That's not to mention the import tariffs imposed on China and other countries, which CEO Elon Musk admits could cause a significant increase in the cost of autoparts. Additionally, Tesla's sales have fallen in both Europe and China even as overall electric vehicle consumption has increased, indicating that other manufacturers have caught up or passed Tesla.
Despite all of these clear and obvious issues, however, CEO Elon Musk downplayed the notion that the company is in a state of financial crisis.
“We’ve gone through many a crisis over the years and actually been… on the ragged edge of death – at least, maybe a dozen times,” he told investors on the conference call Tuesday, according to CNN. “This is not one of those times. We’re not on the ragged edge of death, not even close. There are some challenges and I expect that this year will be probably be some unexpected bumps this year but I remain extremely optimistic about the future of the company.”
Musk, however, did not specifically mention the plan to eliminate tax credits for electric vehicles.