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Tesla has reported a steep decline in profits for the first quarter, with earnings falling more than 70% to $409 million, or 12 cents per share. This substantial drop is significantly below analyst expectations. The company also experienced a nine percent decrease in revenue, totaling $19.3 billion for the January to March period, which again fell short of Wall Street forecasts.
The downturn is attributed in part to an ongoing backlash against CEO Elon Musk, whose involvement in a federal government workforce reduction initiative has sparked protests and division across the country. Furthermore, Musk’s vocal support for far-right political figures in Europe has alienated potential customers in that market, contributing to the declining sales.
Investor sentiment has turned critical, with many voicing concerns that Musk’s political engagements are distracting him from his responsibilities at Tesla. There are calls for him to reconsider either his role at the company or his political advisory positions.
Despite a troubling year that has seen Tesla’s stock price drop by over 40%, there was a slight uptick in after-hours trading following the earnings report.
Tesla is scheduled to hold a conference call later today to discuss the quarterly performance and provide updates on company developments. Investors will be particularly attentive to news regarding upcoming strategic plans, including the anticipated launch of a more economical version of its high-demand Model Y SUV and the initiation of a paid driverless robotaxi service in Austin, Texas, slated for June.
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The electric vehicle market is becoming increasingly competitive, with several manufacturers challenging Tesla’s long-held dominance. Notably, Chinese company BYD has unveiled a new electric battery charging system capable of fully charging a vehicle in mere minutes. Additionally, European competitors are introducing technologically advanced models, gaining traction as public sentiment shifts against Musk.
While analysts believe Tesla may be less affected by potential tariffs from the Trump administration due to its production of most vehicles domestically, the company still faces challenges. Some of the materials sourced from overseas will incur tariffs, impacting overall costs. Furthermore, retaliation from China has already forced Tesla to suspend orders for its Model S and Model X from mainland customers, although production for the Model Y and Model 3 remains operational at its Shanghai facility.
Source
globalnews.ca