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If you’re watching Tesla these days, you’re witnessing a company at a fascinating crossroads. The world’s most valuable automaker just released its first-quarter 2025 earnings, and the numbers tell quite a story.
The numbers aren’t pretty
Let’s start with the raw data: Tesla reported Q1 revenues of $19.34 billion, significantly below the $21.43 billion analysts expected and down from $21.3 billion a year ago. Profits took an even harder hit, plummeting 71% to $409 million from $1.4 billion in Q1 2024.
Adjusted earnings per share came in at $0.27 versus the $0.44 Wall Street anticipated.
When you dig deeper into these numbers, something interesting emerges. Tesla would have actually lost hundreds of millions of dollars if not for $400 million in interest income from its cash reserves and investments, plus $595 million from selling regulatory credits to other automakers struggling to meet emissions standards.
The Musk factor sends the stock upward
Despite these disappointing results, Tesla’s stock shot up by 6% on Wednesday. Why? Because Elon Musk announced something investors have been desperately waiting to hear: he’s scaling back his government work.
“Starting early next month, in May, my time allocation to DOGE [Department of Government Efficiency] will drop significantly,” Musk declared during the earnings call. While he’ll continue spending a day or two per week working with the Trump administration, he pledged to allocate “far more of my time” to Tesla.
This news sent Tesla shares jumping 5% in after-hours trading immediately following the announcement.
What’s behind the sales slump?
Tesla delivered 336,681 vehicles in Q1 — the company’s worst delivery quarter since Q2 2022 and well below the 390,342 units analysts expected. This represents a 13% drop compared to the same period last year.
The company pointed to several factors behind this decline:
- Trade uncertainty: Tesla cited “rapidly evolving trade policy” that “adversely impacts the global supply chain and cost structure of Tesla and our peers.”
- Production line adjustments: Executives attributed part of the sales decline to slowdowns as the company reworked assembly lines for a new version of the Model Y.
- Rising competition: Chinese automakers like BYD have been aggressively eating into Tesla’s market share.
- Political backlash: In a carefully worded statement, Tesla acknowledged that “changing political sentiment could have a meaningful impact on demand for our products in the near-term” — likely referring to consumer reactions to Musk’s political activities.
The Cybertruck stumbles
The Cybertruck, Tesla’s futuristic pickup that consumed enormous resources during development, appears to be struggling in the market. According to Cox Automotive, Cybertruck sales in Q1 were down approximately 50% from Q4 2024.
Tesla’s website has recently offered discounts of up to $8,500 on Cybertrucks in inventory, despite the vehicle’s starting price of $70,000.
What’s next for Tesla?
The company confirmed two major initiatives that investors have been anxiously tracking:
- Affordable vehicles: Tesla reaffirmed plans to begin production of lower-cost vehicles in the first half of 2025. Interestingly, the company described these as utilizing “aspects of the next generation platform as well as aspects of our current platforms” and said they’ll be produced on the same manufacturing lines as existing models.
- Robotaxi timeline: The company still expects “Robotaxi volume production starting in 2026.” Musk specifically mentioned plans to deploy robotaxi testing in Austin in June.
However, Tesla declined to provide its customary full-year guidance, citing economic uncertainty: “It is difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains, our cost structure, and demand for durable goods and related services.”
The Trump tariff tangle
While Tesla is somewhat insulated from President Trump’s automotive tariffs since its U.S. factories produce all vehicles sold domestically, the company still faces challenges. Its American factories use parts imported from Mexico and China that will be subject to tariffs, forcing Tesla to either raise prices or accept lower profit margins.
During the earnings call, Musk admitted he hadn’t been able to dissuade Trump from implementing these tariffs: “I will continue to advocate for lower tariffs rather than higher tariffs, but that’s all I can do.”
The protest problem
Tesla’s brand has taken significant hits from Musk’s political activities. His role in the Department of Government Efficiency — which has cut over 260,000 federal jobs through firings, buyouts, and early retirements — and his support for right-wing politicians have triggered protests at Tesla showrooms worldwide.
Some protests have even escalated to vandalism and arson, with incidents reported across the United States, Sweden, Italy, Germany, Australia, and New Zealand.
During the earnings call, Musk addressed these issues directly, claiming without evidence that protesters were “paid for” and were “receiving fraudulent money or the recipients of wasteful largesse.”
The verdict
Tesla remains at a critical juncture. Despite maintaining its position as the most valuable automaker by market capitalization and the dominant EV seller in the United States, its shares have lost approximately half their value since mid-December.
The company’s near-term prospects now hinge on several key factors: successfully launching affordable vehicles next year, advancing its autonomous driving technology amid growing competition from Waymo and Chinese companies, navigating trade uncertainties, and managing the impact of Musk’s political activities on its brand image.
One investment manager’s assessment was particularly stark. Ross Gerber, CEO of Gerber Kawasaki, didn’t mince words: “This is the worst performance I’ve seen in Tesla’s history.”
For Tesla investors and observers, the coming quarters will reveal whether the company can recapture its growth trajectory or if this marks a more permanent shift in its fortunes.
