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Tesla saw a 9% drop in revenue year over year in the first quarter of 2025. The company brought in $19.3bn in revenue, well below Wall Street expectations of $21.45bn. The company reported an earnings per share of 27 cents, also well under investor expectations of 43 cents in earnings per share.
Tesla profits also slid 71% to $409m compared with $1.39bn in net income the previous year.
The company suffered a 13% drop in vehicle deliveries, making it the company’s worst quarter since 2022. Tesla closed the quarter with 336,681 vehicles delivered.
Despite missing Wall Street expectations on the top and bottom line, initial analyst reactions are optimistic given many had significantly lowered their expectations after the company reported a massive dip in vehicle deliveries.
“Against the backdrop of catastrophic expectations, with everything from sales to margins projected to continue the slump, the less-than-bad numbers have been received as welcome news by Tesla investors,” said Thomas Monteiro, senior analyst at Investing.com. “In a curious turn of events, it’s as if numbers show that even at the worst moment, Elon and the team’s operation can still bring a robust $19.3bn in revenue, with total revenue partly making up for the huge drop in auto revenue.
“If this is the worst it gets for Tesla, then certainly there must be some upside for the stock once tailwinds, such as the highly awaited cheaper model and the Robotaxi, finally hit the market later this year,” Monteiro continued.
Analysts attribute the company’s overall difficulties to a number of factors, but ultimately conclude Elon Musk’s role in the White House has caused a branding crisis for Tesla. The company is at a major crossroads, analysts say, that will only be remedied if Musk leaves his role in the so-called “department of government efficiency” and returns to Tesla as CEO full time.
Musk is scheduled to leave Doge on May 30, a strict 130-day cap on his service as a special government employee.
In addition to a drop in sales, a 50% dip in share prices, existing Tesla owners are looking to sell their vehicles in droves, Teslas have been vandalized across the country and in response to ongoing protests of the automaker, the Vancouver International Auto show removed the electronic carmaker from its March lineup. The company also recalled 46,000 Cybertrucks – nearly all that had been sold.
“If Musk leaves the White House there will be permanent brand damage…but Tesla will have its most important asset and strategic thinker back as full time CEO to drive the vision and the long term story will not be altered,” read a Wedbush Securities analyst note. Wedbush remained bullish on the company’s chances of turning its financials around. “IF Musk chooses to stay with the Trump White House it could change the future of Tesla/brand damage will grow.”
The company declined to provide forward-looking guidance for the next quarter citing “shifting global trade policy on the automotive and energy supply chains”.
“While we are making prudent investments that will set up both our vehicle and energy businesses for growth, the rate of growth this year will depend on a variety of factors, including the rate of acceleration of our autonomy efforts, production ramp at our factories and the broader macroeconomic environment,” the earnings report reads. “We will revisit our 2025 guidance in our Q2 update.”
The company did warn, however, that “changing political sentiment” could meaningfully impact short-term demand for Tesla products.
Though Musk has acknowledged there have been “rocky moments” of late, he remained optimistic about the company’s future at a March company all-hands meeting where he urged employees to hold onto their stocks.
“But what I’m here to tell you is that the future is incredibly bright and exciting, and we’re going to do things that no one has even dreamed of,” Musk told employees.
Analysts are looking to hear more about Musk’s role in the White House and how tariffs will affect the company’s production, but many investors had already lowered their expectations in anticipation of a tough quarterly report.
“At this point the Street has already cut 2025 deliveries from the 2 million/1.9 million level to 1.7 million/1.65 million and EPS is now around $2 and could go lower,” the Wedbush analyst note read.
