Tesla’s Quarterly Earnings Report: Profit Margins Expected to Narrow, Focus Shifts to Trump Connection
Tesla is expected to report narrower profit margins in its quarterly and full-year results on Wednesday, as a result of a drop in annual sales and increased competition in the electric vehicle (EV) sector. However, the company’s large swaths of investors seem more focused on CEO Elon Musk’s close ties to President Donald Trump than the troubling signs coming from the car company.
Shares of Tesla have risen 57% since the close of trading on Election Day, despite the company’s troubles, including a change in federal emission regulations that could reduce the billions of dollars it receives from the sale of regulatory credits. The company also nearly lost its title as the world’s largest maker of EVs to Chinese automaker BYD at the end of last year, even though BYD has yet to enter the US market.
However, Musk’s close connection to Trump has investors hoping that the new administration will clear the way for some of his grand plans, including the approval of true self-driving cars that don’t have accelerator or brake pedals or steering wheels. The company’s “Full Self-Driving” (FSD) technology has faced investigations into its safety by the National Highway Traffic Safety Administration, and has been criticized for not living up to its promises.
Despite this, Musk insists that truly driverless “Cybercab” robotaxis from Tesla will be available by 2026 and that its service will make it the most valuable company in the world. Analysts like Dan Ives, Wedbush Securities, believe that the Trump factor will benefit Musk and Tesla, and that the value of autonomous vehicles and FSD will be unleashed.
However, not all analysts share this view. Gordon Johnson, a vocal critic of Tesla, believes that the controversy surrounding Musk, including his support for Trump and far-right political parties, is hurting demand for Tesla cars among liberal American and European buyers. He also notes that the softening growth in the American EV market is a major problem for the company.
Musk has also faced criticism over his lack of focus on running Tesla, as he spends more time on his other business ventures, including rocket and satellite company SpaceX, social media platform X and artificial intelligence company xAI. The company’s CEO is expected to report on the future of its regulatory credit sales on Wednesday.