Tesla Inc. TSLA CEO Elon Musk and Vice President of Finance Sendil Palani addressed allegations of the EV company evading taxes in posts on X over the weekend. The company did not evade tax but carried it forward as per an Internal Revenue Service (IRS) provision, they said.
What Happened: Musk called for tax reform in a post on social media X on Saturday, claiming there are too many “loopholes.” Following the post, several X users noted that his EV company Tesla did not pay federal income tax for several years, including in 2024.
“Tesla losses were high for many years, so carry forward. Super majority of profit is from production and sales overseas, not US. But the point I am making IS that we need tax reform!,” Musk wrote in response to the allegations.
Tesla VP of Finance Palani also took to X to address the claims.
“Tesla’s income taxes are not an example of fraud. Tesla complies with all tax regulations in all of the regions of the world in which we operate,” Palani said.
“Details about 2024 Income Taxes were disclosed to last month in our 10-K (filing with the Securities and Exchange Commission). Notably – we outline our net operating loss carry-forwards, which result from the fact that Tesla has been unprofitable for the significant majority of its 20+ year history,” he said, while urging everyone to not look at any one recent year in isolation for details on the company’s finances.
A tax loss carryforward is an IRS provision that allows businesses to carry a tax loss from one year into future years to offset a portion of their taxable income.
Why It Matters: Tesla turned a full-year profit for the first time in 2020. The company reported a net income of $721 million for 2020 and in 2024, this rose to $7.09 billion. In 2023, Tesla’s net income attributable to shareholders was nearly $15 billion.
For the full-year 2024, Tesla recorded total revenue of $97.69 billion, marking a growth of about 1% from the year before, despite a 6% drop in automotive revenues which was offset by a rise in revenue from the company’s energy generation and storage segment.
The company reported earnings per share of $2.04, down 53% from the year before, following a drop in annual vehicle deliveries and heavy discounting measures aimed at hiking sales.
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