Key takeaways from Tesla’s (TSLA) Q1 2025 report

Tesla Inc. (NASDAQ: TSLA) has reported unimpressive first-quarter results amid a significant decline in vehicle deliveries and average selling prices. The company has been going through a rough patch for quite some time, with a demand slump in key markets and intense competition — especially from Chinese EV makers — weighing on sales and profitability. The management said it would revisit its FY25 guidance in the second-quarter update.

The Austin-headquartered electric car giant’s stock is struggling to regain strength after falling from a record high about four months ago. The value has nearly halved since then, with slowing demand and economic uncertainties weighing on investor sentiment. Tesla’s brand perception suffered after CEO Elon Musk’s controversial engagement with the administration, regarding government spending cuts. TSLA has underperformed the S&P 500 index so far this year.

Stock Gains

On Wednesday, the stock rose after Musk announced his decision to focus more on the business and spend less time at the Department of Government Efficiency, an initiative to streamline federal operations. The move came after the company reported a sharp fall in first-quarter sales and earnings, which also missed estimates by wide margins. It appears that investor sentiment got a boost after President Trump hinted at settling for a lower China tariff than announced earlier. He also ruled out removing Federal Reserve chair Jerome Powell.

“The future of the company is fundamentally based on large-scale autonomous cars and large-scale, large volume, vast numbers of autonomous humanoid robots. So, the value of a company that makes truly useful autonomous humanoid robots and autonomous, useful vehicles at scale at low cost, which is what Tesla is going to do, is staggering. I continue to believe that Tesla, with excellent execution, will be the most valuable company in the world by far. But that’s an important if, we must execute well,” Musk said while interacting with analysts this week.

Profit Plunges

In the first quarter of 2025, the tech firm’s adjusted earnings, excluding one-off items, dropped to $0.27 per share from $0.45 per share a year earlier, missing estimates. Unadjusted net income was $409 million or $0.12 per share in Q1, compared to $1.39 billion or $0.41 per share in the corresponding period of 2024.

March-quarter revenue was $19.3 billion, compared to $21.3 billion last year. The top line missed estimates. Automotive revenue was down 20%. In recent years, Tesla’s quarterly numbers failed to meet expectations quite often. The company produced a total of 362,615 vehicles in Q1 and delivered 336,681 units, marking a deterioration from the prior-year quarter when it manufactured 433,371 vehicles and delivered 386,810 units.

Model Y Ramp

The main reason for the slowdown in production and deliveries is factory updates across the company’s four production facilities to roll out a new version of Model Y, the top-selling Tesla car. Model Y is expected to become the first model to be fully autonomous by June this year. The management expects the autonomous vehicle program to take effect in a material way around the middle of next year.

Tesla’s stock traded higher throughout Wednesday, after closing the previous session at $237.97. The average price for the last 12 months is $270.18.