Tesla's earnings stumbles in Q1 2025, promises a cheaper future

Tesla’s latest earnings report for the first quarter of 2025 was rough, but the company insists better days are ahead.

On Tuesday, the electric vehicle maker reported a bruising set of Q1 results, missing expectations on both revenue and profit. Revenue came in at $19.34 billion, far below Wall Street’s $21.11 billion target. Earnings per share missed too, at $0.27 vs. the expected $0.39. That’s the lowest revenue Tesla has reported since Q3 2021, and net income collapsed 71%.

It gets worse. Deliveries fell 13% to 336,681 vehicles, and production slid 16%. Automotive revenue plunged 20% year-over-year to just under $14 billion. Tesla blames factory retooling for a revamped Model Y, price cuts and sales incentives to stay competitive, and softer demand overall.

But the story isn’t entirely bleak. The energy business — once a footnote — grew 67% year-over-year to $2.7 billion. Services revenue was also up. And Tesla ended the quarter with $37 billion in liquidity and positive cash flow of $700 million.

The stock, though, is down 37% year-to-date. Public perception isn’t helping. Reports of vandalism, global protests, and customers offloading their cars have created a PR nightmare. Polls show nearly half of Americans now view both Tesla and CEO Elon Musk negatively.

Much of that is tied to CEO Elon Musk’s political role heading the Department of Government Efficiency (DOGE) under President Trump, a position that has blurred the lines between corporate leadership and national politics.

Musk addressed the controversy head-on during the earnings call. He called the protests “organised and paid for” and confirmed he’ll leave his government role next month, allowing him to focus on Tesla, though he plans to stay loosely involved.

Looking ahead, the company says its plans for a cheaper EV model — aimed at competing with BYD and Rivian — remains on schedule for early 2025. These vehicles will combine new and existing platforms and use the company’s current production lines. Tesla also hinted that Robotaxi and FSD (Full Self-Driving) tech could help flip the narrative.

However, the company isn’t offering a growth forecast yet. It says it will reassess its 2025 guidance next quarter, citing “shifting global trade policy,” new tariffs, supply chain volatility, and uncertain macro conditions. Trump’s 25% tariff on auto imports, along with existing tariffs on parts, only adds to the pressure, especially as it still relies on other countries like Mexico for parts.

After the report, Tesla stock nudged up 1% in after-hours trading, a modest move by Tesla’s standards. Investors seem to be reserving judgment, waiting to see if Tesla can actually deliver on its next chapter.