Tesla drama: profit drop of 71 percent - what's behind it?

Tesla drama: profit drop of 71 percent - what's behind it?

On April 22, 2025, Tesla published financial results for the first quarter of 2024 and announced significant declines in sales and profits. Sales fell 9% year-on-year to $19.3 billion (€16.99 billion), while profits fell dramatically by 71% to just $409 million. These numbers contrast with analysts' expectations, which predicted revenue of over $21 billion and adjusted earnings per share of $0.39; However, the result actually turned out to be disappointing at $0.27 per share.

After-hours trading reacted cautiously to the announcement of these figures, and Tesla shares fell almost 1%. A key factor in this decline could be the decline in vehicle deliveries, which fell 13% year-on-year to 336,681 vehicles. Industry experts suspect that the switch to a renewed generation of Model Y and a production break of several weeks due to retooling of production lines contributed to this decline. According to oe24, the political activities of Elon Musk, who donated over $250 million to Donald Trump's election campaign, also had a negative impact on business. Critics accuse Musk of being reckless in cutting government spending, which could potentially deter potential buyers.

Competitive pressure and market position

In addition to internal challenges, Tesla faces strong competitive pressure, particularly from Chinese automakers such as BYD. This competition, coupled with a lack of new vehicle models, has contributed to a decline in sales. However, according to NY Times, Tesla continues to have the highest valuation among automakers worldwide and also leads the electric vehicle sector in the US.

However, the overall market development for electric vehicles remains positive. The electric vehicle market size is estimated at $500.48 billion in 2023 and could grow to $671.47 billion by 2024. The market is forecast to grow to $1,891.08 billion by 2032, with an expected annual growth rate (CAGR) of 13.8%. According to Fortune Business Insights, government subsidies, strict emissions regulations and increasing demand for sustainable mobility are identified as key drivers for this growth.

Despite the current difficulties, Tesla remains in a dominant market position, with the company still being the largest manufacturer of electric vehicles in the USA. Nevertheless, the combination of political controversies, market changes and product strategies could determine how Tesla develops in the future.