Is Elon Musk's chief cash cow, Tesla, falling by the wayside as he is busy chopping and changing the federal government? Here's what reports say

As Elon Musk got busy with politics and big bets on AI, his once-thriving company, Tesla paid the price. The electric car maker's net profit dropped 71% to $2.3 billion in the fourth quarter of 2024, as per reports.

Tesla's financial health

Revenue for Tesla rose marginally during the period but couldn't supplement the significant decline in profitability.

For the whole year, Tesla's profit fell to $7.1 billion from $15 billion during the same quarter last year, 2023, reported Futurism. The company's total revenue for 2024 is at $97.7 billion for the quarter.


The sales this quarter stood at $25.7 billion, which is lower than Wall Street's expected $27.1 billion, reported Futurism.

Regulatory credits to the rescue

A chunk of Tesla's revenues in this quarter came from selling government-doled regulatory credits, which was $692 million, reported Futurism. That represents the amount Tesla collected by selling pollution credits to other carmakers. But this can't be a reliable source of revenue as US president Donald Trump indicated his plan to end the regulations that allow emissions profiteering.

Car sales decline

Musk's focus on the controversial, low-volume Cybertruck model also showed sales slumping, as per the report. The vehicle was under constant scrutiny for its design and workmanship, and sales appear to be falling.

Tesla also reduced car prices to boost sales and in turn impacted its bottom line. Musk has also made huge investments in AI and data centres, which took a toll on Tesla's finances, reported Futurism.

FAQs

Why did Tesla's profits drop so significantly?
Tesla’s profits took a hit mainly because of falling car sales, a decline in the value of its Cybertruck, and heavy reliance on selling regulatory credits, which may no longer be a stable revenue stream.

How is Musk’s involvement in other ventures affecting Tesla?
Musk's focus on political issues, AI, and the robotaxi business has shifted attention away from Tesla’s core operations, which might be contributing to its struggle with profitability and car sales.