“The main work of establishing the department of government efficiency has now been completed,” Musk said on a conference call with analysts on Tuesday, and he will “allocate more of my time to Tesla” starting in May. Musk said he now expects to spend “one or two days a week on government affairs”
Tesla struggles to sell vehicles as it protests against Musk’s leadership Doge, a layoff group that splits the country. The Austin, Texas, company reported a 71% drop in profits in the first quarter and a 9% drop in revenue.
“Investors want to see his advice to Tesla,” said Dan Ives of Wedbush Securities. “This is a big step in the right direction.”
Investors sent more than 5% of Tesla’s shares in after-hours transactions, although these stocks remained more than 40% for the year.
The company reconfirms that it hopes to launch a version of its best-selling vehicle, the Y Model Y Sportistion vehicle in the first half of this year. It also sticks to its forecast that it will be able to launch a paid-free driverless robot service in Austin in June, and many fleets operate on their own next year.
“Millions of Teslas will be operating automatically in the second half of the year,” Musk said on a conference call after the results were announced. Later, he added that individuals use self-driving cars, “Can you sleep in our cars and wake up at your destination? I’m confident it will be available in many cities in the United States by the end of this year.” Sam Abuelsamid, an automation analyst for telemetry insights, said he doubted Musk’s predictions.
“The system isn’t enough for unsupervised operations. It still causes too many mistakes,” he said. “It will make a sudden mistake and it will cause a crash.”
Planned robots without steering wheels or pedals are launched as federal regulators still openly investigate whether Tesla hopes to allow cars to drive completely safely.
Tesla’s driver-assistance technology can guide or stop cars, but still requires humans to take over at any time (its so-called autopilot) and is being investigated by the National Highway Traffic Safety Administration to ensure adequate reminders of drivers when their attention is lingering. Moreover, the company’s entire self-driving is only partially autonomous and has caused criticism of misleading drivers’ names, which is under scrutiny for its relationship with accidents that occur under low visibility conditions, such as sun glare.
Another challenge to Tesla, which once dominated the electric vehicle business: this is the first time facing fierce competition.
Earlier this year, Chinese electric car maker BYD announced the development of a battery that can be charged in minutes. Tesla’s European competitors have begun offering new models with advanced technology, making them a true alternative to Tesla, just like the popular insights to Musk. Tesla CEO alienated potential buyers in Europe by publicly supporting far-right politicians there.
Tesla said on Tuesday that quarterly profit fell from $1.39 billion to $409 million, or 12 cents a share. This is much lower than analysts’ estimates. Tesla’s revenue fell from $21.3 billion between January and March to $19.3 billion, which is also lower than Wall Street’s forecast. Tesla’s gross profit margin is a measure of revenue per dollar, down from 17.4% to 16.3%. Tesla said the Trump administration’s tariffs will cause less damage than most American auto companies because it makes most of its American cars at home. But this won’t be completely unscathed. It sourced some materials from abroad, which will now face import duties.
Tesla warned that the announcement of tariffs will also reach its energy storage business.
Revenge from China will also hurt Tesla. The company was forced to stop ordering two models, the Model S and Model X, earlier this month. It makes Y Model Y and Model 3 used in the Chinese market at the Shanghai factory.
The company sold the “regulatory credit” to other side businesses that meet emission standards, which boosted results for the quarter.
Tesla generated $595 million from credit sales, up from $442 million a year ago.
The company generated $2.2 billion in cash flow, compared with $242 million a year ago.
Morningstar analyst Seth Goldstein said early reports on sales and sales have caused stock sales to drop so quarterly results are almost predictable.
“It’s not particularly strange given the delivery collapse,” he said. “It’s nice to see positive cash flow.”
