Analysts suggest that Musk’s support for Donald Trump could negatively impact sales
In the fourth quarter, Tesla’s net income fell to $2.6 billion, or 73 cents per share, missing Wall Street’s expectations of 77 cents per share. Revenue increased by 2% to $25.7 billion, below the anticipated $27.1 billion. The company delivered 495,570 vehicles in the quarter, bringing total annual deliveries to approximately 1.8 million—a decrease from the previous year.
To boost sales, Tesla has implemented financing offers and discounts on older models, a strategy that is expected to reduce future automotive profit margins due to high interest rates. The company’s gross profit margin for the October-December period was 16.3%, down from 19.8% in the previous quarter.
Additionally, Tesla’s significant revenue from selling regulatory credits to other automakers is under threat following policy changes by the Trump administration, which has rolled back federal electric vehicle targets. In 2024, Tesla earned nearly $2.8 billion from these credits, but this revenue stream may diminish as emissions goals are revoked.
Despite these challenges, Musk remains optimistic, aiming to launch unsupervised full self-driving technology as a service in Austin by June. Tesla is also working to reduce vehicle costs, offering models below $35,000, and plans to produce more affordable models in the first half of the year.
However, the company faces increasing competition from rivals like China’s BYD, BMW, and Volkswagen, contributing to its first annual profit decline. Operating income fell by 35% to $8.9 billion in 2023, marking the first drop since Tesla became profitable in 2020.
Analysts caution that Musk’s political affiliations, particularly his support for Donald Trump, could further impact Tesla’s brand perception and sales, especially among environmentally conscious consumers.
