Tesla Inc. CEO Elon Musk and Vice President of Finance Sendil Palani have responded to allegations of tax evasion. The company claims it did not evade taxes but rather carried them forward in accordance with an Internal Revenue Service (IRS) provision.
What Happened
Musk took to social media over the weekend to call for tax reform, stating that there are too many “loopholes” in the current system. Following his post, several users pointed out that Tesla did not pay federal income tax for several years, including in 2024. Musk responded by explaining that the company’s losses were high for many years, allowing them to carry forward their taxes. He also noted that the majority of Tesla’s profits come from production and sales overseas, not in the US.
Musk’s Statement
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!
Tesla VP of Finance Responds
Sendil Palani, Tesla’s VP of Finance, also addressed the allegations on social media. He stated that Tesla’s income taxes are not an example of fraud and that the company complies with all tax regulations in the regions where it operates.
Palani’s Statement
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.
Details about 2024 Income Taxes were disclosed last month in our 10-K. 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.
Tax Loss Carryforward
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, with a net income of $721 million. In 2024, the company’s net income rose to $7.09 billion. For the full-year 2024, Tesla recorded total revenue of $97.69 billion, marking a growth of about 1% from the previous year.
Key Financial Highlights
- Net income: $7.09 billion (2024)
- Total revenue: $97.69 billion (2024)
- Earnings per share: $2.04 (2024)
Conclusion
Elon Musk and Tesla’s VP of Finance have addressed allegations of tax evasion, explaining that the company has complied with all tax regulations and has carried forward its taxes in accordance with an IRS provision. The company’s financial performance has been strong in recent years, with significant growth in revenue and net income.