Tesla last night warned that tariff wars and political upheaval could take its toll on demand – as it reported a slump in both sales and profits, writes Jessica Clark.

The electric car maker last night revealed it missed analyst expectations as earnings tumbled by 71pc to €360m and car sales fell 20pc to €12.3bn in the first quarter.

It comes after demand for Tesla’s vehicles tanked amid the controversy surrounding Tesla founder and chief executive Elon Musk, a close ally of the US president.

Investors are also concerned about growing competition from cheaper rivals and that Musk’s position in the Trump administration has pulled his attention away from Tesla.

Ahead of the earnings report, Wedbush analyst Dan Ives warned Musk was facing a “code red situation” if he continues his government role.

And the manufacturer stands to take a huge hit from Trump’s proposed tariffs on the components and materials it imports from countries such as Mexico and China.

Unveiling the crucial update, the company said: “Uncertainty in the automotive and energy markets continues to increase as rapidly evolving trade policy adversely impacts the global supply chain and cost structure of Tesla and our peers.

“This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term.”

It comes after the company this month revealed that deliveries tanked 13pc in the first three months of this year – its worst quarterly result since 2022.

The figure was much worse than feared by analysts and laid bare the impact of the controversy surrounding Musk.

The dismal result left the Texas-based manufacturer lagging behind Chinese rival BYD which has been dubbed the “Tesla killer”.

Shenzhen-headquartered BYD – which stands for Build Your Dreams – has overtaken Musk’s firm as the world’s biggest producer of electric vehicles.

Photo: Elon Musk looks. (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)