Elon Musk Is Running Out Of Ideas To Save Tesla

Forbes

Elon Musk is dialing down his DOGE role that triggered protests and vandalism at Tesla stores. But its EV business needs a hit product and none is on the horizon. And the company’s booming battery business, a Q1 bright spot, will suffer from Trump’s tariffs.  Read the full story on Forbes: https://www.forbes.com/sites/alanohnsman/2025/04/25/elon-musk-is-running-out-of-ideas-to-save-tesla/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, Elon Musk is running out of ideas to save Tesla.

00:07This past week, Tesla posted its worst quarterly results in four years.

00:12Sales were down 9%, income plummeted 71%, hurt by a 20% drop in automotive revenues.

00:20And given tariffs and rocky market headaches, the company didn't bother giving sales targets

00:25for the rest of the year.

00:27But the stock rallied as investors cheered one thing.

00:31Elon Musk says he'll soon step back from his duties gutting the federal government through

00:35Doge and return to running the show at Tesla in a more full-time capacity, accepting his

00:41other responsibilities at SpaceX, XAI, and Neuralink.

00:46However, that's not the cure-all investors seem to think it is.

00:51The problems Tesla now faces have been exacerbated by Musk joining the Trump administration as

00:56a special government employee.

00:59Those problems include declining profit margins, intensifying competition, and a tarnished

01:04brand image.

01:06And they show no signs of disappearing anytime soon, even if Musk becomes a more active CEO

01:12again.

01:13Worse, it's becoming clear Musk has run out of ideas for how to fix them, instead fixating

01:19on an uncertain future focused on robo-taxis and humanoid robots.

01:25For now, Tesla profits from selling cars and battery storage systems, and both businesses

01:30are in trouble.

01:32It has no successor to monster sellers like the Model Y and Model 3.

01:37At the same time, it's about to get hit by President Trump's tariffs, which are expected

01:41to chill auto sales across the industry.

01:44Worse for Tesla, though, a coming 145% tariff on imported Chinese battery sales is set to

01:51hammer the company's battery pack business, one of the only bright spots last quarter.

01:57Musk downplayed these problems on the April 22 results call.

02:00He said, quote,

02:01Some of those bumps, though, are entirely expected.

02:14Though Musk's political activities have been more time-consuming since Trump returned to

02:18office on January 20, aided by $250 million from the world's richest person, his embrace

02:24of right-wing politics and inflammatory social media comments have tarnished Tesla's brand

02:30image for well over a year, particularly in important markets like California and Europe.

02:37Multiple polls, including one by Marquette University Law School this month, found that

02:4260% of people surveyed had an unfavorable view of Musk and 58% disapproved of his dogework.

02:48A YouGov Yahoo News survey last month found that 67% of Americans would not consider buying

02:55or leasing a Tesla, with most saying Musk was the reason.

03:00The most pressing challenge for Tesla is reversing the decline in its EV sales, down 13% in the

03:06first quarter.

03:08More alarming is that automotive revenue dropped 20%, meaning it sold fewer vehicles and charged

03:13less for them.

03:15The entirety of its $409 million profit came from regulatory credits, free money it gets

03:21from other automakers to comply with pollution rules in the US, California and the EU.

03:27Without the $595 million in credits Tesla sold in the quarter, it would have posted a net loss.

03:35The simplest, most obvious fix for ailing sales is a new model.

03:39Rather than doing that, however, Musk and his engineers are readying refreshed and cheaper

03:45versions of the Y and 3, which went on sale in 2020 and 2017 respectively.

03:51Rather than doing what traditional automakers call a so-called full model change, where the

03:56body shape and interior are dramatically altered, the 2025 Model Y is more of a refresh of the

04:022024 version, with a new light bar running across the front hood and rear sections, sleeker headlights

04:09and more aerodynamic wheels.

04:12That could provide a jolt to sales, but it's not a winning long-term strategy.

04:16There's a reason why car companies regularly release new models.

04:21Dramatic styling changes typically produce better results, according to industry researcher Glenn

04:26Mercer, who leads Cleveland-based advisory firm GM Automotive.

04:32Neither Musk nor Lars Moravi, Tesla's head of vehicle engineering, shared details of how

04:37the company planned to offer the cheaper variants on the earnings call.

04:42Industry analysts expect Tesla to do this by using a smaller, cheaper battery pack with

04:47less driving range and eliminating tech features.

04:51For full coverage, check out Alan Owensman's piece on Forbes.com.

04:57This is Kieran Meadows from Forbes.

04:59Thanks for tuning in.

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