Tesla (TSLA 2.03%) stock has declined 41% year to date, making it one of the 10 worst-performing companies in the S&P 500. Shares initially soared when Donald Trump won the presidential election in November. CEO Elon Musk spent over $250 million to support his campaign, so investors assumed Tesla would benefit under the Trump administration.
However, the situation has backfired spectacularly. Musk's ties with Trump, and the time he has dedicated to the Department of Government Efficiency (DOGE), have made him a polarizing political figure. Meanwhile, tariffs on imported auto parts threaten to raise costs for Tesla at a time when the company has already seen demand nosedive.
Tesla released its first-quarter earnings results after the market closed on Tuesday, April 22. The report itself was a disaster, but Musk gave investors some much-needed good news on the conference call. Here are the important details.
NASDAQ: TSLA
Key Data Points
Tesla's Q1 2025 earnings report was a disaster
Earlier this month, Tesla reported that first-quarter deliveries declined by 13% to 336,681 vehicles, marking the lowest total in three years. That means investors had some inkling of the bad news in store before the company announced its first-quarter earnings results this week. Even so, the report was a disappointment across virtually every metric of consequence.
Tesla missed Wall Street's estimates on the top and bottom lines. Total revenue fell 9% to $19.3 billion, driven by a 20% decline in automotive revenue. Operating margin narrowed by 3 percentage points to 2.1%, the lowest level in six years. Non-GAAP (non-generally accepted accounting principles) net income decreased by 40% to $0.27 per share. And the company did not provide guidance for the second quarter because it is "difficult to measure the impacts of shifting global trade policy."
Those dismal numbers reflect weakening demand around the world, as CEO Elon Musk has become involved in politics. Tesla lost significant market share in battery electric vehicles in all three major markets in the first two months of the year. The data below comes from Morgan Stanley.
- China: Tesla's market share declined 4 percentage points to 6.9%.
- Europe: Tesla's market share declined 8.6 percentage points to 8.2%.
- United States: Tesla's market share declined 8.5 percentage points to 47.2%.
Image source: Tesla.
CEO Elon Musk shared good news about DOGE, affordable vehicles, and robotaxis
Equity analyst Dan Ives at Wedbush Securities recently said that Tesla risks "permanent brand destruction" that would alter the investment thesis if Musk does not immediately separate himself from politics and refocus on the company.
During the quarterly conference call, Musk told analysts that he plans to make a change, saying his time spent with the Department of Government Efficiency (DOGE) will likely drop "significantly" starting in May. Shareholders were probably hoping for a more complete disengagement, but Musk at least seems to be moving in the right direction.
Additionally, in the quarterly investor presentation, management wrote, "Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025." Those models could help stem the market share losses that have hammered Tesla so far this year.
Musk also restated plans to offer autonomous ride-sharing services in Austin by June. Tesla needs that product launch to go well because Alphabet's Waymo (with help from Uber) has rapidly won market share in Austin since bringing its robotaxis to the city in March. Musk thinks autonomous driving could have a material impact on Tesla's bottom line by the end of 2026.
Finally, Musk said Tesla is on track to have thousands of autonomous humanoid robots (called Optimus) working in its factories by year-end. He also informed analysts that the company aims to scale Optimus production to one million units per year by 2029, and he previously stated that a commercial launch is possible in the second half of 2026.
Importantly, autonomous driving and robotics are multitrillion-dollar revenue opportunities for Tesla, and both businesses should eventually have much higher margins than its core automotive manufacturing operation. In other words, Tesla could be much more profitable in the future if it successfully monetizes robotaxis and autonomous robots.
