All eyes were on Tesla as the EV maker reported Q1 earnings Tuesday amid one of its most turbulent periods in recent memory, thanks to slowing demand, President Donald Trump’s trade war, and CEO Elon Musk’s controversial foray into politics.
Financial falters: Tesla’s net income plummeted 71% YoY to $409 million. The company would have reported a loss were it not for the $595 million in regulatory credits it sold to other companies.
Results largely missed Wall Street expectations. Revenue of $19.3 billion was down 9% YoY, while automotive revenue fell 20%.
Tesla said vehicle deliveries fell 13% YoY in Q1. Analysts have attributed Tesla’s recent woes to its outdated product lineup, growing competition in the EV sector, and Musk’s role in the Trump administration and explicit embrace of right-wing politics.
Analysts at Wedbush called it “a disaster quarter” but expressed optimism about Musk’s announcement that he’ll soon be stepping back from his role at the so-called Department of Government Efficiency. Musk said that, starting next month, he’ll resume a more hands-on role at Tesla—though he plans to remain involved at DOGE for the remainder of Trump’s term.
Still, Wedbush analysts cautioned that “the brand damage caused by Musk in the White House/DOGE over the past few months will not go away,” estimating a roughly 10% hit to future demand.
Tesla said it plans to “revisit” its guidance for the year in its Q2 earnings report. Shares in the company are down 37% year-to-date.
AV updates: Some analysts were buoyed by Tesla’s updates on its various autonomous-vehicle initiatives. The company said it’s on track to launch a driverless taxi service in Austin this June, and that its purpose-built robotaxi product, the Cybercab, “is scheduled for volume production starting in 2026.”
Musk, who is notorious for making overly optimistic statements that don’t pan out, said that by the second half of next year, he expects “there will be millions of Teslas operating fully autonomously.” He also expressed confidence in Tesla’s ability to compete with robotaxi sector leader Waymo, which is already providing hundreds of thousands of paid rides per week. Musk predicted that Tesla would have “99% market share or something ridiculous.”
Keep up with the innovative tech transforming business
Tech Brew keeps business leaders up-to-date on the latest innovations, automation advances, policy shifts, and more, so they can make informed decisions about tech.
Affordable EV: Tesla said its plans to introduce new models, including an affordable EV, are on track for the first half of next year.
This was welcome news to investors, who have been clamoring for an affordable EV. Cantor analysts said they were pleased by many of these updates, and that they “continue to believe Tesla is better positioned (relative to other OEMS) to mitigate impact from tariffs…However, we do expect some consumer backlash from Elon’s polarizing politics to continue to affect consumer demand.”
Tariff trouble: Revenue from Tesla’s energy storage business was up 67% YoY, but the company acknowledged that “the current tariff landscape will have a relatively larger impact on our energy business compared to automotive.” The company also warned that “rapidly evolving trade policy” and “changing political sentiment, could have a meaningful impact on demand for our products in the near-term.”
The Trump administration has enacted 25% tariffs on all vehicle imports, among a slew of other trade policy changes. Tesla is in a better position compared to some of its competitors because it produces its US vehicles domestically, but it still sources vehicle components from other countries.
“We are, I think…the least affected car company with respect to tariffs, at least in most respects,” Musk said. He added that “the tariff decision is entirely up to” Trump, but that he would “continue to advocate for lower tariffs.”