this post was submitted on 09 May 2025
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Things at Tesla are worse than they appear (edition.cnn.com)
submitted 3 days ago by technocrit@lemmy.dbzer0.com to c/technology@lemmy.world
89 comments fedilink hide all child comments
 

Things are undoubtedly bad at Tesla. Its sales are dwindling. Its profits are plunging, as is its share price. There are regular protests outside its showrooms. The Cybertruck is a flop. And somehow, it’s actually a lot worse than that.

The 71% drop in net income it just reported may have been overshadowed by CEO Elon Musk’s announcement that he would be stepping back from his controversial duties at the Department of Government Efficiency (DOGE). But that drop is just one indication of serious financial sickness at the EV maker, problems brought on by falling sales for the first time in its history and falling prices for electric vehicles.

The bottom line problem at Tesla is its vanishing bottom line. A deeper look at its first quarter report shows it’s now losing money on what should be its ostensible reason for existence – selling cars.

It was only able to post a $409 million profit in the quarter thanks to the sale of $595 million worth of regulatory credits to other automakers.

But if the Trump administration gets its way, the company can kiss those regulatory credits keeping it in the black goodbye, too.

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[–] Thrashy@lemmy.world 7 points 1 day ago

In fairness(?) Ford bet big on small cars in the wake of the Great Recession, and that worked well for a while, but by the time they decided that the only non-truck (from a CAFE standpoint) that they were going to keep selling was the Mustang, they were losing money on every Focus and Fiesta they sold.

A lot of that was their godawful automatic transmission that was forcing them to spend zillions in warranty repairs, but at the end of the day the margin on economy cars is so slim that you can't afford to make mistakes. Rather than bet on perfect execution in a market that was already shrinking in the US, they decided to focus on higher-margin products... and that's fine in the short term, but as you mention it's going to leave them exposed once nobody can afford to spend $50k+ on a horrifically overpriced big pickup anymore.