Cogito Ergo Non Serviam
Tesla Has Disastrous First Quarter
Tesla, Inc. (TSLA-NASDAQ) issued its required 10-Q filing with the Securities and Exchange Commission yesterday. This is a document that must be filed every 90 days to keep the market up-to-date on the company's activities. This particular filing made for grim reading for those long Tesla stock and bonds. While assets improved by $3 billion compared with the last quarter, just about every other number showed a decline in the fortunes of the firm. The explanation in the Management Discussion and Analysis section read more like a list of excuses. The most important thing unsaid what that this will not end in the second quarter.
A brief overview is in order. Automotive sales fell about $3.5 billion over the fourth quarter of 2024, from $16.46 billion to $12.925 billion. Gross profit was down $500 million from $3.696 billin to $3.153 billion. Total operating expenses were up $250 million from $2.525 billion to $2.754 billion. Net income collapsed dropping around $900 million from $1.39 billion to just $409 million.
The MD&A said in part, "As a result of rapidly evolving trade policy, uncertainty in the automotive and energy markets continues to increase, posing risks to our global supply chain and cost structure which could have a meaningfully adverse impact on demand for our products and our profitability. The current tariff regime will have a relatively larger impact on our energy generation and storage business compared to our automotive business. While we prepare for near-term challenges to our business under current policies, we are focused on long-term growth opportunities as we continue to make prudent investments."
A text search in the document does not mention the Department of Government Efficiency nor does it mention that CEO Elon Musk of the company has been AWOL for months. However, most of the investors already know this. They have lost something on the order of $900 billion in equity since the election.
To address this desire, Mr. Musk will be making some effort at appearing to be in charge of Tesla. "Probably starting next month, in May, my time allocation at DOGE will drop significantly," Mr. Musk said. "I'll have to continue doing it. I think we have the remainder of the President's term just to make sure that the waste and fraud that we stopped does not come roaring back, which it'll do if it has the chance."
Mr. Musk said he would spend "a day or two per week on government matters for as long as the President would like me to do so, as long as it is useful. But starting next month, I will be allocating far more of my time to Tesla now that the major work of establishing the Department of Government Efficiency is done."
The last sentence is a punch line. There is no Departrment of Government Efficiency. It has no line on the federal budget. It has no office. It has no real staff. It does not exist.
There is another issue that will cause Mr. Musk to step away from DOGE. As a "special government employee," he cannot work for Uncle Sam for more than 130 days every 365. He has already spent about 90 days at it. One day a week from here to the end of the 365 days would put him over the limit.
Because of the number of shareholders, the Tesla board takes questions in writing in advance. One asked, "Is the Tesla board discussing whether their CEO should focus fully on Tesla and leave gov't to elected politicians?" The answer was a dissatisfying word salad that did not shed any light on any such discussions.
Stay short as the bleeding has not stopped. The Chinese are making better electric vehicles for less money. The places friendliest to EVs are those that hate Tesla the most now. Red ink ocean ahead.
© Copyright 2025 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.
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