Tesla’s death is “not close” says Musk, as operating margin drops to 2%

As Elon Musk helps undo regulations, regulatory credits keep Tesla profitable.

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[EnPeaSea]

I support raising taxes on the rich. I'm not rich. And I don't support wasteful spending.

Seems like you are a classic conservative who stood still and found themselves on "the left" while former peers sprinted toward fascism.

 

[Tonkaman]

Are you nuts? Have you ever been inside a 2025 Tesla? They're a decade ahead.

Maybe against an early 2000s Kia. Problem is they're in the price range of today's BMWs and Cadillacs.

 

[ScifiGeek]

Seems like you are a classic conservative who stood still and found themselves on "the left" while former peers sprinted toward fascism.

I think you are giving them too much credit. Their posts are just pure Musk Stan and MAGA.

 

[EnPeaSea]

Already achieved, the US federal government spends 23% of GDP.

Thanks, you're right. Total government spending is 35%.

Someone needs to bring some receipts!

I think you are giving them too much credit. Their posts are just pure Musk Stan and MAGA.

I am (perhaps naively) choosing to take their interactions with me at face-value and for that they have been consistent with "small government, less spending, lower taxes on average folk".

 

[ScifiGeek]

Someone needs to bring some receipts!


I am (perhaps naively) choosing to take their interactions with me at face-value and for that they have been consistent with "small government, less spending, lower taxes on average folk".

Cheering the removal of programs to literally feed starving children goes beyond small government, into 100% selfish MAGA screed.

 

[fenris_uy]

Someone needs to bring some receipts!


I am (perhaps naively) choosing to take their interactions with me at face-value and for that they have been consistent with "small government, less spending, lower taxes on average folk".

Federal government != Total Government.

Trump and Elon are in control of the Federal Government. CA and TX aren't funding USAID from their state budgets. Neither is Los Angeles county or Bexar County.

 

[EnPeaSea]

Cheering the removal of programs to literally feed starving children goes beyond small government, into 100% selfish MAGA screed.

You say poh-tah-toe. "They were wasteful because they were keeping the people from doing for themselves" is more libertarian (or as I said "classic conservative") to me than "TRUMP AND MUSK ARE FUCKING AWESOME!"

Shades apart, but violet and indigo are not the same color.

 

[EnPeaSea]

Federal government != Total Government.

Trump and Elon are in control of the Federal Government. CA and TX aren't funding USAID from their state budgets. Neither is Los Angeles county or Bexar County.

I meant, "can someone provide a link to how they got to their figure".

(Edit: I misread between the 2 comments)

 

[ScifiGeek]

You say poh-tah-toe. "They were wasteful because they were keeping the people from doing for themselves" is more libertarian (or as I said "classic conservative") to me than "TRUMP AND MUSK ARE FUCKING AWESOME!"

Shades apart, but violet and indigo are not the same color.

Libertarian is NOT classic conservative. That's more like an excuse to be even more selfish than the average republican. Also look at his posting history. It's defending Musk/Tesla from the beginning. So a Musk Stan all the way.

Did you look at the list of cuts. Do your really think giving aid in these circumstances is keeping people from doing for themselves?

https://apnews.com/article/usaid-cuts-hunger-sickness-288b1d3f80d85ad749a6d758a778a5b2

 

[Uragan]

Their own budget? Humanitarian aid was 25% at most.

So you don’t consider spending on improving health, infrastructure, agriculture or education “aid”?

 

[EnPeaSea]

Do your really think giving aid in these circumstances is keeping people from doing for themselves?

I do not; I have a bad habit of steel-manning arguments to ensure I understand what another means instead of what I assume.

 

[ducatisymphony]

I fully support that, as a leftist. Why are you supportive of a global hegemon exercising soft power to influence democracies covertly around the world? Especially when we know (or at least I do, as someone with many friends in the nonprofit industrial complex) how corrupt government-funded "non-government" organizations are. When I worked for one, 85% of our donations went to overhead.

Just a note that I have never met anyone on the left of the political spectrum who refers to themselves as a "leftist". Seems more like a term someone cosplaying as a liberal would say.

 

[Uragan]

Are you nuts? Have you ever been inside a 2025 Tesla? They're a decade ahead.

No they aren’t. Hence why people have been waiting a decade for the Roadster 2 to come out or there hasn’t been an appreciable uplift to the Model S.

 

[ranthog]

Tesla uses its data centers to train it's autonomous driving model. The salaries for programmers are probably a small fraction of the hardware cost, so I didn't bother mentioning it, but yes, those costs are separate from the business of selling normal EVs too. It is able to afford to build the data centers because its car sales are profitable. That's where the 16% gross margin comes in. And I'm not talking about valuation, just Teslas ability to sell cars at a profit, that's you moving the goalposts.

That is just R&D expenses, which all automakers occur. All automakers have to cover R&D with vehicle sales.

 

[fenris_uy]

I meant, "can someone provide a link to how they got to their figure".

(Edit: I misread between the 2 comments)

https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/

The federal government spent $6.75 trillion in FY 2024. This means federal spending was equal to 23% of the total gross domestic product (GDP), or economic activity, of the United States that year.

 

[ranthog]

They have a lower TCO than a Toyota and are the only cars on the planet you can buy that can drive themselves 98% of the time, and have many other features no other car has.

Tesla's can drive themselves 0% of the time.

Level 2 autonomous systems are simply drivers aids, and you have to be driving all the time.

I have no idea what "feature" I'm missing on my Bolt that no other car but a Tesla could give me. Are excessively expensive repairs a feature?

 

[ranthog]

Just a note that I have never met anyone on the left of the political spectrum who refers to themselves as a "leftist". Seems more like a term someone cosplaying as a liberal would say.

The person who claims to be a "leftist" yet only seems to agree with the fascists might be a fascist.

 

[ScifiGeek]

Just a note that I have never met anyone on the left of the political spectrum who refers to themselves as a "leftist". Seems more like a term someone cosplaying as a liberal would say.

Good point. "Leftist" is usually a derogatory term that MAGA crowd uses as a put down.

 

[AusPeter]

We've been giving this aid for decades and nothing has changed. Only seems to inculcate learned helplessness and promote the birth of more hungry babies. We should more openly share with them the values and ideas that made us prosperous enough to help them, while letting them be in charge of their own political destinies, and imposing tariffs so they can develop diversified, self-sufficient economies on their own terms.

Do you know what that aid bought? It bought China (or any other adversary you want to consider) not paying for that aid, and decreasing their soft power.

Do you know what has changed? The field is now open for China (or any other adversary you want to consider) picking up the slack and increasing their soft power.

And that's not even considering that all these aid programs are also subsidies for US farmers etc.

 

[Focher]

Volumes of internal-combustion metal in 2025 prove little about readiness for the phase-out mandates that kick in across the EU (2035) and Tier-1 Chinese cities (2030). Ford’s ≈4.4 M ICE shipments last year are a bonfire of stranded assets if they can’t be electrified on time. Tesla’s 100%-BEV mix means every incremental unit already meets the future rule-book, a rather handy “head start.”

I compared free-cash flow, not net profit, because it reveals whether the business can fund itself.

Tesla Q1 25: $664 M FCF, $2.2 B operating cash, $37B cash on hand.
Ford Q1 25: –$1.3B operating loss in Model e; management guides –$5B to –$5.5B 2025 loss.
If cash is oxygen, Ford’s EV unit is the one gasping for air.

Highland was a facelift on a single Shanghai line that eventually made its way to other continents. “Juniper” swaps entire body-in-white presses for giga-castings on four continents, plus the 4680-ready under-structure. That surgery must be simultaneous or you end up shipping old and new VINs side-by-side, a logistics nightmare. Inventory days of supply still fell to 22 during the downtime, so the buffer was minimal.

Tesla’s own press release says the refreshed Model Y line in Austin is already producing saleable cars and that Shanghai hits volume “this summer.” If they miss, I’ll eat humble pie; meanwhile it’s fair to cite the company’s public timetable.

Not “bad”, just apples to oranges:

BYD’s ≈5-6% net is achieved on 90% domestic sales behind China’s VAT rebate and a yuan that fell 4% last year, shielding margins.

Tesla’s 2% is global, tariff-hit, and after pumping $1B/quarter into R&D, triple BYD’s spend per vehicle.

Different battlefields, different economics.

Ars’s own title: “Tesla’s death is ‘not close,’ says Musk.” When you shoehorn “death” into a margin story, you’re ringing a funeral bell even if you skip the word “spiral.”

Lineup: Model Y remained the world’s best-selling car in 2024, ICE or EV. (OECD tally, Jan 2025.)

Autonomy: Waymo boasts 50M rider-only miles in three geofenced U.S. cities. Tesla’s FSD fleet has logged >2B miles on public roads in 42 countries. Call me when Waymo sells an autonomy stack to customers for $12K apiece (nevermind that Tesla has been shouting from rooftops that they'll start producing the Cybercab at volume early next year)

They already priced in the Q1 hit. TSLA traded up 4% the day after earnings once the cash-flow figure hit the tape. Investors care less about one GAAP line than about runway and product cadence.

BYD exports just 10% of volume; the EU slapped provisional tariffs up to 45% effective Oct 2024, with the U.S. at 100% under Biden, then 125% under Trump. Expansion route: Latin America, Southeast Asia, fine markets, but not the profit pots of Europe or North America. (I suspect BYD will eventually crack those markets, but you seem focused on the wrong question here. Just who do you think should be more worried about BYD? Tesla, or any company like Ford or Toyota, which don't produce EVs in any meaningful volume?)

Every new vehicle launches on an S-curve; Tesla built 3k/week by early April, tracking toward the promised 250 k/year run-rate. That’s faster than Rivian or Lucid reached 50 k annualized, and neither of them had to reinvent 9k-ton die-casting while they were at it.

Bottom line: you’ve offered a shotgun blast of objections; none refute the simple math that the only large-scale BEV makers turning any profit at all are Tesla and BYD, and only one of them sells outside China at meaningful volume. When the revamped Model Y and next-gen compact hit stride, we’ll see whose margin snaps back first. I’ll bookmark this thread for the repost.

Let me summarize your analysis. Tesla's 2025 Q1 was actually great because it generated positive cash to add to their existing stockpile, and as a pure BEV manufacturer they're in the best position as the ICE bans take effect in the next 5-10 years. And any reduction in sales was because of the retooling / model upgrades. Got it.

Here's the fundamental problem with that analysis. It's based on a fallacy. Tesla's sales are collapsing. Everywhere. The retooling wasn't really meaningfully impactful, and we know this because there were no significant backorders that accrued during that period. It's just plain fact that Tesla's sales are way down and there's nothing to point to a recovery at this point. It's likely going to get worse. Way worse.

And almost all of the cash it added in Q1 was based on carbon credits. You know what happens to carbon credits when your own BEV sales go down? The credits and cash you get for them go down. So Q2 is actually gonna be 1) less sales, 2) less profit per sale, and less carbon credits.

Does Tesla have a lot of cash to ride it out 2-3 years? Sure, but investors aren't going to like seeing that cash balance decrease without showing that it's doing anything more than prop up a dying company. That money is supposed to be for investing in growth. But the growth is gone. and there's no set of facts which suggest it will come back as long as Musk is involved.

 

[Psychophant]

How exactly is it a “mistake”? Tesla is the sum of its multiple sectors.

Yes it is, and if I am talking about a SINGLE sector, it is a mistake to continually drag the conversation back to the sum of all its sectors. I never denied the profitability of the company as a whole is declining and could get negative. Once again, I am talking solely about their business of selling cars.

What exactly do they do outside of cars, selling carbon credits to other OEMs and their energy sector?

They have their solar sales, and Optimus robot and FSD they hope to sell(and sinking lots of R&D costs into), service centers, and charging network they are opening up to other manufacturers.

That is not true if the number of cars that they sell continues to decline.

Yes, sales CAN decline, they CAN also rise. You can manufacture all the possible if then statements you want, but they don't address my point. Do you seem to think there are no circumstances under which Tesla could make a profit selling cars?

So what you’re saying is that they’re getting close to spending more than what the sale of cars can offset?

Yes. This question implies you are actually understanding that Tesla sells cars at a profit today, is this correct? Seems like you are in agreement with my previous statement "They can lose money and still be profitable on every car they make."

 

[ranthog]

Do you know what that aid bought? It bought China (or any other adversary you want to consider) not paying for that aid, and decreasing their soft power.

Do you know what has changed? The field is now open for China (or any other adversary you want to consider) picking up the slack and increasing their soft power.

And that's not even considering that all these aid programs are also subsidies for US farmers etc.

Its not even that. The aid also fought problems like drug resistant diseases in third world countries. The lack of funding to fight TB and HIV is likely going to make the problems with drug resistant versions much worse world wide, including in the US.

Besides being the right thing to do, these public health programs also work from a point of 100% self interest. The same is true with things like vaccination programs.

 

[ackmondual]

No amount of anecdotal stories like the one in the NYT about the VA funeral planner, where nowhere in the entire article was there a discussion of what her workload was/if there were too many people already assigned, will convince me that all or most of these cuts are bad. The left wants to treat government workers like sinecures and treat federal employment like a jobs program. I have so many friends and family who've worked in the public sector that I know it is true that the waste is real. The sky will not fall if we do something about it.

So you won't believe anecdotal stories, but you then proceed to cite your own anecdotal stories to make your case.

 

[stormcrash]

So you won't believe anecdotal stories, but you then proceed to cite your own anecdotal stories to make your case.

And notice how they pivoted from claiming to be a "leftist" to slandering "the left" as their boogeyman

 

[Psychophant]

Ford Q1 25: –$1.3B operating loss in Model e; management guides –$5B to –$5.5B 2025 loss.
If cash is oxygen, Ford’s EV unit is the one gasping for air.

That's about a $57000 loss per car sold in the quarter. Good thing their ICE vehicles can support such losses for now. I would have thought the losses would have come down with their slightly better sales. They even have the third best selling EV in the US, 11k sales for the MachE!

Meanwhile GM can't move Bright drop vans even with $30k discounts, moving only 274 in Q1(up 7% from '24) and will shut the factory down for half a year. I had thought this segment would have been much better for Tesla to move into than the Cyber truck, but it looks like not.

The complete inability of anybody to make money selling EVs alongside Tesla in the US is certainly a surprise from where things looked to be going 3 years ago.

 

[AusPeter]

Automakers have R&D to build their next models of cars. Tesla has huge R&D expenses unrelated to its car business that all the other automakers don't have. I don't see Ford spending billions buying Nvidia GPUs. They aren't planning to roll out a taxi network, or sell humanoid robots. It makes no sense to include all those expenses when analyzing Tesla's car division separately.

Let me know when Tesla has upheld its promise of FSD, or has rolled out a taxi network, or has delivered humanoid robots. Or even the cheap cars they keep promising.

Hint: I'm not holding my breath.

 

[ranthog]

Automakers have R&D to build their next models of cars. Tesla has huge R&D expenses unrelated to its car business that all the other automakers don't have. I don't see Ford spending billions buying Nvidia GPUs. They aren't planning to roll out a taxi network, or sell humanoid robots. It makes no sense to include all those expenses when analyzing Tesla's car division separately.

All the major automakers are paying for the development of autonomous vehicles. What do you think GM's Cruise is? These automakers just aren't selling systems to customers a decade or more before they're ready. So not all that different, is it?

The major automakers are petty heavily invested into robotics and the development of such. More capable robots are always of interest to them. Case in point would be that companies like Toyota regularly have demonstrated their robots. So not really all that different, is it?

So far you have absolutely nothing that other automakers aren't already doing.

 

[Uragan]

Yes it is, and if I am talking about a SINGLE sector, it is a mistake to continually drag the conversation back to the sum of all its sectors. I never denied the profitability of the company as a whole is declining and could get negative. Once again, I am talking solely about their business of selling cars.

Then why are you bringing up their other sectors in the very next sentence?

They have their solar sales, and Optimus robot and FSD they hope to sell(and sinking lots of R&D costs into), service centers, and charging network they are opening up to other manufacturers.

What market is there for a humanoid robot exactly? A robot that has only been operated via telepresence thus far. Industrial robots have been a thing for decades and not once has there been a demand for making said robots humanoid.

Additionally there is no real demand for humanoid robots in the recreational sector outside of the insanely rich. Not to mention that any humanoid robot is going to be insanely lacking in capability for the foreseeable future, regardless of what promises and aspirations Musk puts out there. (Of course there are huge privacy and liability concerns that Musk hasn’t addressed yet… which should give everyone pause.)

Musk has been promising a L5 ADS being just around the corner for over a decade and has yet to deliver. He says that robotaxis are right around the corner but fails to mention the very expensive costs (that he himself has mentioned in the past) that Tesla owners will need to shell out for to actually utilize this mythical technology. Of course, Tesla is also far behind Waymo and other OEMs with their technology, as well as considered one of, if not the, worst ADAS implementations out there.

Yes, sales CAN decline, they CAN also rise.

And water is wet. No shit sales can either decline or rise. This isn’t something profound, you know.

You can manufacture all the possible if then statements you want, but they don't address my point. Do you seem to think there are no circumstances under which Tesla could make a profit selling cars?

I didn’t say that they couldn’t make a profit selling cars. I said that if sales continue to decrease, they will continue to become more unprofitable.

Yes. This question implies you are actually understanding that Tesla sells cars at a profit today, is this correct? Seems like you are in agreement with my previous statement "They can lose money and still be profitable on every car they make."

So… explain to me how it was their revenue from carbon credits kept them in the positive for Q1 if their cars are profitable? If they didn’t have the carbon credits, they would have had a negative net income?

 

[Uragan]

They have a lower TCO than a Toyota and are the only cars on the planet you can buy that can drive themselves 98% of the time, and have many other features no other car has.

Pretty sure Chinese OEMs have better ADAS than Tesla. And other OEMs have L3 ADS, which Tesla does not have.

Having a fart button in the car is not a selling point. Having intentionally obtuse methods of manually opening the doors from the inside is not a positive feature.

 

[bjn]

Is that you Elon?

 

[orwelldesign]

meanwhile it’s fair to cite the company’s public timetable.

I just have to say, not having gotten into the numbers at all, that this one sentence screams credulous naivete. The company's public timetable is a g-d laughingstock, they've been so wrong so often. They're the only company I can think of that has been so, um, charitably: "optimistic." Less charitably? Proven liars who lie a lot.

You seem to think they'll deliver the things they've promised, at the price they've promised them, at the time they said they'll deliver them. A cursory reading of their history says none of that is true.