The negative publicity surrounding the Elon Musk-Donald Trump association, a decline in electric vehicle sales, and the now abundant competition in this segment have led to a 30% drop in revenue for Tesla's automotive division compared to the previous quarter.
Equally concerning is the energy division — the one that had been showing the strongest growth at Tesla, having doubled its sales in 2024 — which also took a hit, with an 11% revenue decline from the previous quarter; the same goes for the services division, where revenue fell by 8%.
As a result, due to the significant operational leverage, both operating profit and earnings per share have been quartered within three months. These developments have forced Elon Musk to distance himself from DOGE and re-engage more intensely with Tesla's management.
Yet, it is known that Musk had grand ambitions as the head of the so-called "Ministry of Government Efficiency," including taking on the defense sector head-on.
The bad press surrounding Tesla lately is not new. Musk has made numerous pie-in-the-sky statements and unfulfilled promises, which his critics have, of course, meticulously documented. However, the group has not lost any of its stock market appeal, at least judging by its current valuation multiples.
It seems that many investors are still betting on a profitable future filled with humanoid Optimus robots — regardless of the "five hundred billion dollars" needed for their development, as Musk himself says — and autonomous taxis built on Tesla chassis, batteries, and operating software.
Indeed, betting against Musk has never been a winning move, even when the evidence against him has piled up. One might scoff when he claims that Optimus will make Tesla a company valued at "twenty-five trillion dollars," but the SpaceX precedent could argue for the genius of boldness over sarcasm.
Regardless, Tesla's glorious saga in the automotive market seems to be well and truly over, as its financial performance now aligns with the average of other sector players.
Moreover, the latest quarterly earnings report reveals an ironic twist — all of Tesla's profit over the past three months comes from federal government subsidies for the purchase of electric vehicles. Quite amusing for a staunch critic of state intervention in the economy!
