{"id":81974,"date":"2025-04-22T21:09:26","date_gmt":"2025-04-23T01:09:26","guid":{"rendered":"http:\/\/autosector.com\/?p=81974"},"modified":"2025-04-22T21:09:26","modified_gmt":"2025-04-23T01:09:26","slug":"musk-complains-about-handouts-when-tesla-was-only-profitable-due-to-credits","status":"publish","type":"post","link":"http:\/\/autosector.com\/?p=81974","title":{"rendered":"Musk complains about handouts when Tesla was only profitable due to credits"},"content":{"rendered":"
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Tesla\u2019s earnings report dropped today, and news isn\u2019t great<\/a>. But instead of recognizing his failures that have led to Tesla\u2019s downturn, CEO Elon Musk lashed out with conspiracy theories while also hypocritically failing to acknowledge that his company was only profitable this quarter due to regulatory credits.<\/p>\n

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The numbers are in on Tesla\u2019s dismal quarter, with sales, profits and margins tanking significantly for the company despite a rising global EV market<\/a>.<\/p>\n

You\u2019d expect a drop in car sales to be top of mind for a car company, but instead of talking about this, CEO Elon Musk opened the call by talking about his ineffective advisory role to a former reality TV host.<\/p>\n

Musk is heading up the self-styled \u201cDepartment of Government Efficiency,\u201d an advisory group that is focused on reducing redundancy in government. The office is not an actual government department and has a redundant mission to the Government Accountability Office, which is<\/em> an actual government department focused on reducing government waste.<\/p>\n

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Musk originally claimed that the department would be able to save $2 trillion for the US government, which is actually impossible because federal discretionary spending is $1.7 trillion<\/a>, which is a (gets out abacus) smaller number<\/em> than $2 trillion.<\/p>\n

He has, of course, failed at this task that anyone with any level of competence would have known was impossible before setting it out for themselves, and now projects that the department will save $150 billion next year, less than a tenth of his original estimate. But even that projection is likely an overstatement, given that most of the supposed savings <\/a>that DOGE has found are not actual savings at all.<\/p>\n

On top of this, the US government\u2019s deficit has grown to the second-highest level on record<\/a> \u2013 with the first happening in 2020, the last time Mr. Trump squatted in the White House. Which means the government isn\u2019t saving money, it is in fact borrowing and spending more of it than ever before.<\/p>\n

So, Musk\u2019s tenure in the advisory board has been an unmitigated failure by any realistic account.<\/p>\n

But if you listened to Tesla\u2019s call, you wouldn\u2019t have known this, as Musk was quite boastful of his efforts \u2013 starting a Tesla conference call with an irrelevant rant about his fake government department, instead of with Tesla business.<\/p>\n

He claimed that he has made \u201ca lot of progress in addressing waste and fraud\u201d and that the job is \u201cmostly done,\u201d which is not correct by his own metrics. Musk stated that his purpose is \u201ctrying to bring in the insane deficit that is leading our country, the United States, to destruction,\u201d and as we covered above, that deficit has only increased.<\/p>\n

But he also went on to spew some rather insane conspiracy theories about the reasons behind his company\u2019s recent failures, all of which of course put the blame on someone else, rather than himself. The buck stops anywhere but here, I guess.<\/p>\n

His primary assertion was that the \u201cblowback from the time I\u2019ve been spending in government\u201d (which, again, is an advisory role, not an actual government position) has come mainly from protesters that were \u201creceiving fraudulent money\u201d and are now angry that the government money spigot has been turned off.<\/p>\n

Which, of course, he\u2019s provided no evidence for\u2026 and he\u2019s provided no evidence for it because it\u2019s false.<\/p>\n

Besides, that\u2019s not how protests work. But incorrect claims that protests do work that way are often used by opponents of free speech, with the motivation of putting a chilling effect public participation. Fitting behavior for an enemy of the First Amendment like Elon Musk<\/a>.<\/p>\n

Meanwhile, this assertion also comes from a person who tried and failed<\/a> to bribe voters<\/a> to win an election. Perhaps his admiration of Tesla protesters is aspirational \u2013 he wishes his ideas were good enough to inspire that sort of grassroots political effort that money, demonstrably<\/a>, cannot buy.<\/p>\n

But this hypocrisy extends beyond Musk\u2019s hatred of free expression, and strikes at the heart of the business he is the titular leader of, Tesla, the organization that has made him into the richest man in the world. Because not only is it not true that Tesla protests are driven by his ineffective government actions (they are, in fact, driven by him doing Nazi<\/a> stuff<\/a> all<\/a> the<\/a> time<\/a>), it\u2019s also objectively true that Musk\u2019s companies are a large recipient of government money.<\/p>\n

And that\u2019s particularly relevant today, to the very earnings call where Musk made his ridiculous assertion, because in Q1 2025, Tesla only turned a profit due to government credits. Without them, it would have lost money.<\/p>\n

Tesla only profitable in Q1 due to regulatory credits<\/h2>\n

Per today\u2019s earnings report<\/a>, Tesla earned $595 million in regulatory credits in Q1. But its total net income for the quarter was $409 million.<\/p>\n

This means that without those regulatory credits, Tesla would have posted a -$189 million loss<\/em> in Q1. It was saved not just by credit sales, but credit sales which increased year over year \u2013 in the year-ago quarter, Tesla made $442 million in regulatory credits, despite having higher sales in Q1 2024 than in Q1 2025. So not only were credits higher, but credits per vehicle were higher.<\/p>\n

This is a common feature of Tesla earnings, and we even said in our earnings preview that we expected it<\/a>. While Tesla had a bad quarter, nobody expected it to become actually unprofitable, because there was always the possibility of increasing regulatory credit sales to eke out a profitable quarter.<\/p>\n

And this has been the case many times in Tesla\u2019s past, as well. In earlier times, Tesla\u2019s first few profitable quarters were decried by the company\u2019s opponents as an accounting trick, suggesting that regulatory credit sales weren\u2019t \u201creal\u201d profits, and that the cars should have to stand on their own.<\/p>\n

This is a silly thing to say \u2013 businesses do business in the environment that exists, and every business has an incentive structure that includes subsidies and externalities. If we were to selectively write off certain profits for certain businesses, we could make a tortured case that any business isn\u2019t profitable.<\/p>\n

Plus, these opponents didn\u2019t extend the same treatment to the oil industry, which is subsidized to the tune of $760 billion per year in the US alone<\/a> in unpriced externalities, yet that is somehow never mentioned during their<\/em> earnings calls.<\/p>\n

Musk has even claimed<\/a>, probably correctly, that if all subsidies were eliminated<\/a> both for EVs and for oil & gas, that EVs would come out ahead compared to the status quo (more recently, Musk has become one of the biggest funders of anti-EV forces<\/a>, allying himself with a bought-and-paid oil stooge <\/a>who is giving even more preferential treatment to the oil industry<\/a>).<\/p>\n

But, setting aside the debate over whether credits are valid profits (they are), for years now we\u2019ve been well beyond Tesla\u2019s reliance on credits. The company has produced significant profits, regardless of credit sales, for some time now.<\/p>\n

At least, until today. That\u2019s no longer true \u2013 Tesla did rely on credits to become profitable in Q1. And Musk starting the call with a ridiculous rant about government handouts not only shows his hypocrisy and projection<\/a> on this matter, but his detachment from reality itself. He is, truly, too stuck in the impenetrable echo chamber of his self-congratulating twitter feed to realize what an embarrassment he\u2019s being in public \u2013 to the point of inventing shadow enemies to explain the very real, very simple explanation that people aren\u2019t buying his company\u2019s cars because he sucks so much<\/a>.<\/p>\n

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Tesla\u2019s earnings report dropped today, and news isn\u2019t great. But instead of recognizing his failures that have led to Tesla\u2019s downturn, CEO Elon Musk lashed out with conspiracy theories while also hypocritically failing to acknowledge that his company was only profitable this quarter due to regulatory credits. The numbers are in on Tesla\u2019s dismal quarter, […]<\/p>\n","protected":false},"author":1,"featured_media":8313,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"class_list":["post-81974","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-e-cars"],"_links":{"self":[{"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/posts\/81974","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=81974"}],"version-history":[{"count":0,"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/posts\/81974\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/media\/8313"}],"wp:attachment":[{"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=81974"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=81974"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=81974"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}