Tesla sees 20% decline in automotive revenue as Q1 results fall short of Wall Street expectations.
Tesla CEO Elon Musk was seen wearing a ‘Trump Was Right About Everything!’ hat while attending a cabinet meeting at the White House in Washington, D.C., alongside U.S. Trade Representative Jamieson Greer and Central Intelligence Agency Director John Ratcliffe on March 24, 2025.
Tesla released its first-quarter earnings report on Tuesday, showing misses on both top and bottom lines as automotive revenue dropped 20% compared to the same period last year. Here are the key numbers compared with expectations:
Earnings per share: 27 cents adjusted vs. 39 cents estimated
Revenue: $19.34 billion vs. $21.11 billion estimated
Total revenue decreased by 9% from $21.3 billion a year ago, with automotive revenue falling to $14 billion from $17.4 billion last year. Tesla attributed this decline in part to the need for updates across its four vehicle factories for a refreshed version of the popular Model Y SUV, and lower average selling prices, along with sales incentives that adversely affected revenue and profit.
Net income fell sharply, down 71% to $409 million, or 12 cents a share, compared to $1.39 billion or 41 cents per share one year ago.
This year has proven challenging for Tesla, with CEO Elon Musk heavily involved in the current administration’s efforts to reduce the size of the federal government. The administration’s sweeping tariffs have raised concerns about rising costs for essential parts and materials for electric vehicle production, such as manufacturing equipment, automotive glass, printed circuit boards, and battery cells.
Tesla has opted not to make growth promises for this year, indicating it will “revisit our 2025 guidance in our Q2 update.” The company’s shares have dropped 41% so far in 2025, experiencing their steepest quarterly decline since 2022 in the period ending in March. After President Trump mentioned no plans to fire Federal Reserve Chair Jerome Powell, the stock saw an uptick of almost 5% in after-hours trading.
In its shareholder presentation, Tesla warned investors about the increasing “uncertainty in the automotive and energy markets,” stating that rapidly evolving trade policies are adversely impacting the global supply chain and cost structures for Tesla and its competitors. This “dynamic,” coupled with shifting political sentiments, could significantly affect near-term demand for Tesla’s products.
Tesla is also facing significant challenges with protests in the U.S. and Europe, where Musk has shown support for Germany’s far-right AfD party. Earlier this month, the company reported a 13% decline in first-quarter deliveries year-over-year, with a total of 336,681 units.
The company has been under pressure from lower-cost competitors in China and is lagging in the U.S. robotaxi market, dominated by Alphabet’s Waymo. Tesla has announced plans to launch its first driverless ride-hailing service in Austin, Texas, this June.
Tesla reassured investors of its timeline, confirming it remains on track for a “pilot launch” in Austin and aims to begin building humanoid robots on a pilot production line in Fremont, California, this year.
Operating income for the quarter decreased by 66% to $400 million from $1.17 billion a year prior, resulting in a 2.1% operating margin. The rise in expenses related to artificial intelligence projects contributed to this decline.
Without revenue from environmental regulatory credits, Tesla would have experienced losses on automotive sales for the quarter. Revenue from these credits rose to $595 million from $432 million in the same quarter last year.
Energy generation and storage revenue surged by 67% in the quarter, reaching $2.73 billion compared to $1.64 billion the previous year. The company noted that advancements in AI infrastructure are creating significant opportunities for its energy storage products, helping to stabilize the grid and provide additional power capacity when needed.
Tesla depends on foreign suppliers for its energy business, noting that “increasing tariffs may cause market volatility and near-term impacts to supply and demand.”
On a call with analysts after the earnings release, Musk stated that Tesla is “the least-affected car company with respect to tariffs,” expressing a personal preference for “predictable tariff structures” and “free trade with lower tariffs.”
