Tesla’s profit per car fell 40% due to tariffs and competition
Elon Musk played a key role in bringing Donald Trump back to the White House, which significantly increased his personal wealth. However, a new analysis shows that Tesla is paying its own price for this. The company that made Musk one of the richest people in the world is watching its profits melt away, even as his wealth grows.
Nikkei Asia recently analyzed the profit per vehicle of seven of the world’s most important automakers. The list included the five largest companies by sales volume, as well as Tesla and BYD. The analysis was based on companies’ financial data and QUICK FactSet indicators. The results show how tariffs in the United States have eroded some of Tesla’s profits.
Leadership remains, but the gap is narrowing
The total net profit for the four quarters through January-March 2026 was divided by global sales figures. It turned out that Tesla earned an average of about $2,140 in profit per car, allowing it to outpace the six other manufacturers analyzed. The key point is that this figure has dropped significantly compared to the $3,438 profit Tesla earned in the same period in 2025. The decline was about 40 percent. Despite the downturn, Tesla retained first place in profit per car for the fifth consecutive time.
Earlier, the margin was even higher, reaching the equivalent of $6,170 in fiscal years 2022 and 2023, according to Nikkei Asia. The report attributes the latest decline partly to the elimination of the $7,500 federal tax credit for electric vehicles, which hurt EV sales across the US. Another reason cited is increased competition from Chinese automakers. Tesla’s revenue from selling regulatory carbon credits also fell, dropping from $2.9 billion in fiscal year 2024 to $1.7 billion in fiscal year 2025 after the relaxation of environmental regulations in the US.
How are competitors doing?
Toyota took second place with about $2,104 in profit per car, roughly 20 percent less than a year earlier. Thanks to a vehicle lineup that is significantly less focused on electric vehicles than Tesla’s, the company is better protected from the downturn, and its hybrids continue to sell actively. Thus, Toyota is less than $40 behind Tesla, while twelve months ago the gap was over $600.
Following Tesla and Toyota is BYD. Despite third place, the reduction in Chinese tax incentives for purchasing new energy vehicles caused the automaker’s net profit to fall by 55 percent in January-March. Stellantis and Ford ended up at the bottom of the list. Both companies showed a profit per car of about $925 in fiscal year 2024, then entered the loss zone in the latest fiscal year.
Interestingly, Tesla’s profit decline occurs against the backdrop of its market capitalization growth, partly linked to Elon Musk’s political ambitions. At the same time, traditional automakers like Toyota are demonstrating greater resilience due to diversification of their model lineup and less dependence on government subsidies. The situation with BYD shows that even leaders of the Chinese EV market are vulnerable to changes in government policy. Overall, the electric vehicle market is entering a phase of intense competition, where profitability is becoming a key challenge for all players.