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.
Technically it’s the intended result. It helped fund one or more purely EV manufacturers for the future. Legacy companies chose not to invest n new technology for the longest time, but had to pay the price. At some point that price is too high but the innovators are awarded and the technology has become cheaper, so the surviving legacy manufacturers can adopt it. Ts a good thing that it helped fund a successful EV manufacturer by penalizing the laggards. That was the goal
The only real failure is the credits were apparently too cheap since legacy manufacturers still had to be forced, and are still regressing the first chance they get