Tesla reported a sharp 71% plunge in profits for the first quarter of 2025, falling well below Wall Street expectations. According to financial results released Tuesday, the electric vehicle giant brought in $19.3 billion in revenue — down 9% from the same period last year. Car sales alone saw a 20% year-over-year decline.
The disappointing earnings come at a pivotal time for the company. Shareholders are voicing concerns about CEO Elon Musk’s divided focus as he continues to serve in a temporary government role. His term with the Department of Government Efficiency (DOGE) is set to end next month, and some investors are urging him to return full-time to lead Tesla through an increasingly competitive and uncertain landscape.
During Tesla’s earnings call, Musk addressed the concerns head-on. He defended his work in Washington, claiming it was essential to “put the financial house in order.” Without offering evidence, he suggested that recent protests against Tesla were driven by people “receiving fraudulent money.”
Despite the controversy, Musk indicated his government involvement is winding down.
“By May, I’ll significantly reduce the time I spend on DOGE,” he said, adding that he would likely commit just one or two days a week for the rest of President Donald Trump’s term to help prevent fraud and waste from returning.
With Tesla’s performance slipping and competition mounting — especially from Chinese EV leaders like BYD — Musk acknowledged he’s preparing to refocus on the automaker’s core business.
Tariffs, Trade, and Tesla’s Global Strategy
Musk also weighed in on the Trump administration’s trade policies, maintaining his long-held stance that lower tariffs are beneficial.
“I’ve said it before — I think lower tariffs are a good idea,” Musk told analysts. “But that’s ultimately the President’s call. I’ll keep advocating for it, but that’s all I can do.”
He noted that Tesla is in a relatively strong position to weather trade disruptions, thanks to its localized supply chains.
Still, the company warned that “shifting political sentiment” and the current tariff climate could impact short-term demand. In a pre-call statement, Tesla said it is working to stabilize its operations and ensure long-term resilience.
“Global trade policies are rapidly evolving, and that’s putting pressure not just on Tesla but across the entire automotive and energy sectors,” the company said.
A Pivotal Moment for Tesla
Dan Ives, a senior analyst at Wedbush Securities and long-time Tesla bull, described the situation as a “fork-in-the-road moment” for the company. Tesla stock has lost about half its value since peaking last December, much of that decline occurring since Musk took on his role in government and launched aggressive cost-cutting initiatives.
Despite maintaining a leadership position in the EV market, Tesla is grappling with new challenges. Deliveries fell 13% in Q1 compared to the same period last year, driven in part by production slowdowns due to Model Y factory reconfigurations.
The company said the transition to the new Model Y is progressing well, despite several weeks of lost output earlier this year. On the earnings call, CFO Vaibhav Taneja noted that acts of vandalism and increasing hostility toward Tesla’s brand have also affected performance in select markets. However, he confirmed that the older Model Y inventory sold out by the end of February.
Tesla’s full-year 2024 numbers, released in January, showed the company sold fewer cars than in 2023 — marking its first annual sales decline in more than a decade.
Robotaxis and Rising Rivals
In January, Musk announced plans to launch a robotaxi pilot program in Austin, Texas, starting in June. But just days later, Chinese rival BYD revealed major advancements in self-driving tech — to be included in vehicles priced under $10,000 — further intensifying the global race in autonomous vehicles.
As Tesla faces declining profits, increased competition, and internal pressure for leadership focus, the coming months could prove critical for one of the world’s most closely watched companies.
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