Tesla's Profits Are Falling Off a Cliff as Elon Musk Self-Immolates

Musk's wealth is suddenly looking brittle.

Nosedive

As Elon Musk is busy gutting the federal government, his chief cash cow, Tesla, is falling by the wayside.

According to the automaker's latest earnings report, Tesla made a net profit of just $2.3 billion in the fourth quarter of 2024 — a 71 percent drop of $5.6 billion compared to the same period a year earlier, even though its revenue saw a slight bump.

That's bad, but we should note that Tesla's profits in 2023 were boosted by a one-time tax benefit of $5.9 billion, the New York Times reported. 

Take that out of the picture, though, and it's still a staggering 23 percent plunge in its income from operating expenses for the fourth quarter. 

For the whole year, meanwhile, Tesla reported a net profit of $7.1 billion, down from $15 billion in 2023.

Car-Less Whisper

Tesla's revenue remains high, with total sales equaling $97.7 billion for 2024, a one percent increase from last year. But for the latest quarter, it's still fallen short of expectations: $25.7 billion, when Wall Street anticipated somewhere in the ballpark of $27.1 billion.

And how it's making this money may give pause. A large chunk of Tesla's revenue, $692 million, came from the sale of government-doled regulatory credits. These are earned by producing cars that produce low or zero emissions, which can then be sold to other automakers that are falling short of emissions requirements. It's a dubious stream of income, and could soon dry up due to a close-to-home foe: Musk's buddy Donald Trump has signaled his intent to end the regulations that allow this emissions profiteering.

Cars sales have also faltered. Tesla's total automotive revenues fell from $82.4 billion in 2023 to $77 billion in 2024 — an ironic testament to Musk's insistence that Tesla, the largest EV maker in the US but not the world, isn't a car company.

This is likely, in part, attributable to Musk's gamble on the controversial Cybertruck, which sells in low volumes and faces constant scrutiny for its dubious design and workmanship. Sales of the vehicle appear to have fallen in the fourth quarter from the previous.

Divided Attention

Tesla also reduced the price of some of its cars to boost sales, hurting its bottom line. It's also invested an exorbitant amount of money in its AI efforts, building enormous data centers that require tens of thousands of expensive graphics processing units.

Whether Musk, ever embroiled in the raging culture war and stationed in the highest echelon of US politics, is the right man to steer the ship of one of the world's most valuable companies has been increasingly called into question even by his own investors, and these latest earnings will continue to raise those doubts.

Musk is taking a massive gamble in AI. And he's taking a just as questionable one with his pivot into the robotaxi business, which he has promised will rake in trillions of dollars for the not-automaker. Further beggaring belief, Musk told investors in a recent earnings call that the robotaxi arm will launch this year, with a fully unsupervised version of the Cybercab, he promised, hitting the streets this summer.

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