Tesla's profits plummet by 71%, leading Elon Musk to announce reduced time in Washington.

Elon's Daily Dive Decreases, Tesla Struggles

In a bone-chilling revelation on a Tuesday, the Top Dog of Tesla, Elon Musk, announced he'd be spending less time in Washington, DC, working for Prezzo Donald Trump. This move comes after Tesla reported a whopping 71% plunge in profits within the first three months of the year.

During a Wall Street powwow, Musk revealed he'd still make a day or two per week about Washington matters, but likely for the duration of Trump's reign. The billionaire is one of Trump's tightest confidants, playing a leading role in the President's efforts to slash government spending and cut a boatload of federal jobs.

Less than two hours after Tesla's profit drop, they announced a relatively modest $409 million profit. This pales in comparison to the $1.4 billion they made during the same period in 2024. Moreover, Tesla had reported net profit of $1.1 billion last year, but later adjusted the figure due to changes in cryptocurrency asset valuations.

The fall of Tesla's sales can be attributed to fierce competition from Chinese carmakers like BYD, lack of new models, and Musk's support of far-right causes, which has pushed away some liberal and centrist buyers.

In a brash remark, Musk linked recent worldwide protests at Tesla showrooms to people losing government aid due to his work with the Trump administration. "The real reason is those who are swimming in the waste and swindling wish it to continue," he said.

Tesla remains the most valuable automaker globally, as measured by its stock price, and sells more electric vehicles in the United States than any other company. However, its shares have taken a nose dive, losing about half their worth since mid-December, as investors have grown increasingly concerned about Musk's role in the Trump administration.

With less time for administration duties, Musk's focus will still be divided. That's because he also runs SpaceX, the social media site X, AI company xAI, and various other ventures.

The earnings were significantly lower than Wall Street's expectations. Tesla's income would've been negative without the $400 million they earned on cash and investments and $595 million from selling credits to carmakers failing to meet emissions regulations that Trump has proposed to eliminate.

Tesla's shares jumped around 4% in extended trading after the company released its quarterly earnings. "Worst performance I've witnessed in Tesla history," said Ross Gerber, CEO of Gerber Kawasaki, an investment firm, on X.

Tesla declined to offer sales and profit forecasts for the remainder of the year, citing economic uncertainty. They mentioned the challenges of measuring global trade policy impacts, costs, and demand for goods and services. The report also subtly acknowledged Tesla's diminishing reputation due to the "changing political sentiment," which could impact demand for their products in the short term.

Tesla's market share has been slipping, with Chinese carmakers and established companies like General Motors, Volkswagen, and Hyundai offering a growing selection of electric vehicles. Their hope to sell 20 million vehicles annually by the end of the decade, twice as many as Toyota, appears uncertain as sales have been plummeting after a peak of 1.8 million in 2023.

Their new vehicle, the Cybertruck, which has drained resources during its development, looks set for a flop. Cybertruck sales in the first quarter dropped around 50% from the last three months of the year, according to Cox Automotive. To give their vehicles a price tag more palatable to the masses, Tesla has recently been offering discounts of up to $8,500 on trucks from their inventory. The Cybertruck starts at $70,000 before federal and state incentives.

Tesla announced plans to produce a lower-cost vehicle by the end of June, giving more people an affordable option for electric cars and potentially reviving sales. However, they have not showcased a prototype or provided many details about the car. Analysts express doubts about its release anytime soon, and it remains unclear whether it'll be a new design or a simplified version of their Model 3 sedan or Model Y SUV.

Despite potential tariffs on autos and parts, Tesla's factories in California and Texas make all the vehicles they sell in the United States, as well as factories in Shanghai and near Berlin that serve much of the rest of the world.

Musk's role at the Department of Government Efficiency, which has been cutting budgets and jobs, has made him a lightning rod. Activists have demonstrated outside Tesla dealerships worldwide, vandalizing or even burning Tesla vehicles.

Insights:- Elon Musk was part of Trump's Strategic and Policy Forum and Manufacturing Jobs Initiative council during the early years of Trump's presidency. However, he left both in June 2017 due to disagreements over climate policy following Trump's decision to withdraw from the Paris Climate Agreement.- Tesla's performance wasn't directly influenced by Musk's involvement with the Trump administration. The company's success is more closely tied to technological advancements and market demand.- The Trump administration did not significantly alter federal EV tax credits that benefited Tesla. However, the phase-out of the federal EV tax credit for Tesla began in 2019, which was a pre-existing policy.- Tesla faced policy challenges including those related to autonomous driving and environmental policies, but these were more influenced by broader industry trends and state-level regulations rather than direct interactions with the Trump administration.- Musk's public stances and controversies affected Tesla's stock price and public perception, but these effects are short-term and not directly linked to his involvement with any administration.

The decline in Elon Musk's involvement in Washington politics may have an impact on the finance and technology sectors, particularly with regards to Tesla and their business strategies.
Despite the associations with politics and Tesla's fluctuating profits, global news continues to cover the advancements in technology, such as Tesla's plans to introduce a lower-cost electric vehicle or the challenges faced by their Cybertruck in the general-news market.

Tesla's profits plummet by 71%, leading Elon Musk to announce reduced time in Washington.