2025 has been a pretty rough year for Tesla, the Texas-based electric vehicle (EV) manufacturer that took the world by storm in 2008 and grew to become the most dominant EV maker globally. With CEO Elon Musk becoming increasingly involved in U.S. politics, a notable portion of the automaker’s mostly left-leaning market has turned away from Tesla, causing its sales and share price to fall sharply.
The once-beloved EV leader has also faced regular protests at various showrooms in major markets like the U.S., and its much-anticipated electric truck, the Cybertruck, has been widely criticized, raising questions about Tesla’s ability to manufacture high-quality electric trucks. Things have gotten so bad at the Elon Musk-led company that it reported a 71% reduction in net income, a clear indication that customers are less willing to buy electric cars from Tesla.
Even though Musk announced that he would step back from his role at the Department of Government Efficiency (DOGE) several weeks ago and has mostly remained out of the news cycle since, the damage done to Tesla’s brand appears significant. The EV company is now struggling with the fallout from its CEO’s controversial political leanings, a notable drop in electric vehicle prices, and dwindling EV sales for the first time since it unveiled its first market vehicle in 2008.
An analysis of Tesla’s Q1 2025 report shows that the automaker is actively losing profitability, a major concern for a company that only recently became consistently profitable. According to the report, Tesla posted a profit of $409 million in Q1 2025, most of it coming from selling $595 million worth of regulatory credits to other carmakers. In other words, Tesla did not register a net profit from electric vehicle sales in the first quarter of the year and was kept afloat mainly by regulatory credits.
These credits may soon be reduced or eliminated by the Trump administration, which continues its efforts to repeal many climate-related policies from the former Biden administration. The recent round of trade tariffs imposed by President Donald Trump and his administration will likely cut into Tesla’s margins by increasing the cost of imported vehicle parts.
Furthermore, Tesla is facing increasingly fierce competition from other automakers, especially Chinese firms like BYD that can manufacture electric cars at lower costs and sell them at relatively affordable prices. Tesla’s sales in Europe have also declined in recent months, even as overall EV sales in both Europe and China have risen, with many European consumers reportedly put off by Musk’s involvement in European political discourse.
Despite the challenges Tesla is currently facing, CEO Elon Musk dismissed the idea that his company was in major financial distress. Speaking during a recent investor call, Musk noted that while Tesla has gone through near-existential crises nearly a dozen times, this isn’t one of them. He acknowledged that the company has some challenges and unexpected bumps to overcome in 2025 but remained optimistic about Tesla’s future.
Other EV makers like Mullen Automotive Inc. (NASDAQ: MULN) need to steer clear of the avoidable pitfalls that have landed Tesla where it is if they wish to increase their share of the market and keep growing.
NOTE TO INVESTORS: The latest news and updates relating to Mullen Automotive Inc. (NASDAQ: MULN) are available in the company’s newsroom at https://ibn.fm/MULN
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