Musk to dedicate more time to Tesla after company sees big drop in profit
Elon Musk has said he will dedicate more time to Tesla starting in May after the company reported a big drop in first-quarter profit.
The company has faced a backlash and angry protests over his leadership of a federal government jobs-cutting group that has divided the country.
Tesla, based in Austin, Texas, said on Tuesday that quarterly profits fell by 71% to to 409 million dollars (£308 million), or 12 cents a share – far below analyst estimates. Revenue fell 9% to 19.3 billion dollars (£14.5 billion) in the January-March period, below Wall Street's forecast.
Tesla's stock has fallen more than 40% this year but rose slightly in after-hours trading.
The disappointing results come as the company struggles to sell cars to consumers angry over Mr Musk's role in the Trump administration. He has also publicly supported far-right politicians in Europe and alienated potential buyers there.
Some investors have complained he is too distracted by his role at the Department of Government Efficiency (Doge) to be running Tesla and that he should either relinquish his position as CEO or abandon his advisory role in Washington.
Morningstar analyst Seth Goldstein said earlier reports of plunging sales that had tanked the stock made the results almost predictable.
'They're not particularly surprising given that deliveries were down,' he said, adding that the company is still generating cash. 'It was good to see positive cash flow.'
The company generated 2.2 billion dollars (£1.6 billion) in operating cash versus 242 million dollars (£182 million) a year earlier.
Tesla investors will be listening closely for updates on several strategic initiatives. The company is expected to roll out a cheaper version of its best-selling vehicle, the Model Y SUV later in the year. Tesla has also said it plans to start a paid driverless robotaxi service in Austin in June.
Its closely watched gross margins, a measure of earnings for each dollar of revenue, fell to 16.3% from 17.4%.
The company that once dominated the electric vehicle market is also facing fierce competition for the first time.
Earlier this year, Chinese EV maker BYD announced it had developed an electric battery-charging system that can fully power up a vehicle within minutes, and Tesla's European rivals have begun offering new models with advanced technology that is making them real alternatives, just as popular opinion in Europe has turned against Mr Musk.
Investors expect Tesla will be damaged less by the Trump administration's tariffs than most US car companies because it makes most of its US cars domestically, but Tesla will not be completely unscathed. It sources some materials for its vehicles from abroad that will now face import taxes.
Tesla warned that tariffs will hit its energy storage business too.
'While the current tariff landscape will have a relatively larger impact on our energy business compared to automotive,' the company said, 'we are taking actions to stabilise the business in the medium to long term and focus on maintaining its health.'
Retaliation from China will also damage Tesla. The company was forced earlier this month to stop taking orders from mainland customers for two models, its Model S and Model X. It makes the Model Y and Model 3 for the Chinese market at its factory in Shanghai.
The company side business of selling 'regulatory credits' to other car makers that fall short of emission standards boosted results for the quarter.
The company generated 595 million dollars (£448 million) from credit sales, up from 442 million dollars (£333 million) a year ago.
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