Tesla Inc. has announced a stunning third-quarter plunge in earnings. The company continued to earn record profits, reeling in $1.5 billion—that’s down 45% from the second quarter of 2023. The EV manufacturer is crashing under the weight of this downturn caused by compromised sales. It’s fighting an uphill battle against headwinds from their own aggressive-priced model and several outside forces.
The seriousness of the company’s financial woes are highlighted by a large $622 million restructuring charge that negatively impacted net income. Tesla was able to deliver nearly 337,000 EVs in Q1. Its net income fell to $409 million on a revenue of $19.3 billion. That’s a shocking 71% decrease from Q3 of last year.
Tesla’s profits were helped by record sales of regulatory credits, which added $890 million to its earnings. Industry analysts warn that existing tariffs would deal a major blow to Tesla’s nascent Energy business. This becomes more important when considering the company’s future profitability, particularly compared to its core automotive business.
In Q1 of 2024, it’s net profits were $1.13 billion, a 55% drop from last year. The continued focus across the industry on cutting costs to stay competitive on price has deepened these losses in profitability. Elon Musk acknowledged this situation, indicating that the price reductions have had a “meaningful impact on demand for our products.”
Tesla’s recent challenges go further than just financial metrics. The company’s now-new management is re-centering its focus after prioritizing regressive projects, like the company’s toxic Robotaxi initiative and the Optimus robot. Critics argue that Tesla has yet to demonstrate its vehicles’ capability to operate autonomously without human intervention, despite years of promises.
Second, political factors, leaving aside COVID-19, have muddied the waters on Tesla’s position in the market. Elon Musk’s connections to the Trump administration have generated a lot of debate. His extreme far-right politics since assuming office have drawn massive boycotts of the brand altogether. This, in turn, has led to an increased consumer cynicism that will only continue to erode consumer faith and loyalty to brands even more.
Tesla is clearly steering through choppy seas. It needs to address internal reorganization and it needs to combat the outside narrative created by Musk’s political associations. To survive, the corporation needs to be more creative and live up to consumer demand. This flexibility will be essential for shoring up operations and returning to stable profitability.
