Tesla shares plummet after company reports falling profits

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The company faces sluggish sales and heightened competition.

Tesla Inc CEO Elon Musk walks next to a screen showing an image of Tesla Model 3 car during an opening ceremony for Tesla China-made Model Y program in Shanghai, China Jan. 7, 2020.fell 12% in early trading on Wednesday after an earnings release showed slumping profits in the face of strengthened competition and sluggish sales.

The earnings results released on Tuesday mark two consecutive quarters of declining profits. Revenue from government credits increased to $890 million in the most recent quarter, accounting for more than half of the company’s profits.Gordon Johnson, CEO and founder of data firm GLJ Research, who is bearish on Tesla, said the boost in revenue from government credits afforded the company a financial lifeline even as it struggled in its main line of business: selling vehicles.

Critics say demand for the company’s vehicles has slowed as a result of its failure to release a new, affordable model, as well as a softening in the overall EV market. As competitors roll out alternatives, Tesla faces a difficult path to regain its previous breakneck growth, analysts previously told ABC News.

Tesla CEO Elon Musk speaks during the official opening of the new Tesla electric car manufacturing plant on Mar. 22, 2022, near Gruenheide, Germany.Dan Ives, a managing director of equity research at the investment firm Wedbush, who is bullish on Tesla, downplayed the weaker-than-expected earnings report and highlighted potential gains from the company’s development of autonomous vehicles.

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