Tesla’s first-quarter results delivered a sobering reality check for investors. On Tuesday’s tesla earnings call, the company reported revenue down 9% year-over-year and a steep 20% slide in auto revenue. Adjusted income cratered 39%, while net income—the strictest profitability measure—plunged 71% compared to Q1 2024. The tesla stock price dipped sharply in regular trading before recovering 4% after hours on news that Elon Musk will scale back his time at the Department of Government Efficiency (DOGE).
Musk Promises Return to Tesla Focus
During the call, Musk announced that beginning in May he will reduce his DOGE commitment to just one or two days per week. He defended his role at the agency—blamed by some for Tesla’s profit slump and showroom protests—arguing that fighting government “waste and fraud” ultimately safeguards both the country and his company. “If the ship of America goes down, Tesla will go with it,” he said, before assuring investors that “the future of Tesla is brighter than ever.”
Trade War Clouds Outlook
Tesla cautioned that the escalating trump administration tariffs on auto imports and parts have injected uncertainty into its supply chain and cost structure. Although its U.S. factories shield the automaker from some duties, Tesla still imports components for domestic assembly. With global trade policy in flux, company executives warned they may need to revise full-year guidance. “It is difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains, our cost structure and demand,” Tesla stated.
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Record Sales Slump Hits Profitability
Tesla’s deliveries plunged by 50,000 vehicles in Q1, marking the largest sales drop in the company’s history and its lowest quarterly volume in nearly three years. That fall-off erased the consistently strong year-over-year gains—often between 20% and 100%. That had underpinned TSLA stock climbing to become the most valuable automaker.
Analysts have linked this downturn partly to Musk’s high-profile DOGE role and outspoken political stances in Europe, which sparked protests and vandalism at Tesla showrooms overseas. Musk suggested that protesters objected to the very “waste and fraud” he’s combating at DOGE. And insisted that “absent macro issues, we don’t see any reduction in demand.”
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After-Hours Rally and Long-Term Outlook
Despite the bleak numbers, Tesla shares—TSLA—jumped 4% in after-hours trading following Musk’s pledge to refocus. He reiterated plans for more “affordable models” by the end of June and unveiled bold timelines for its driverless “robotaxi”. Promising no steering wheel or pedals and a spring launch for initial rideshare service.
“This is a happy future,” Musk declared, painting a vision of “sustainable abundance” driven by autonomous driving and humanoid robots. Technologies that have yet to fully materialize. But remain central to Tesla’s long-term growth story.
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Competition Heats Up in China and Beyond
Compounding Tesla’s challenges is mounting competition in its second-largest market, China. Local giant BYD has outpaced Tesla in quarterly EV sales, a trend likely to cost Tesla its global full-year sales lead in 2025. With Chinese EV makers aggressively expanding, Tesla must navigate both tariff headwinds and intensified rivalry to protect its market share.
Key Q1 Figures at a Glance
- Revenue: –9%
- Auto Revenue: –20%
- Adjusted Income: –39%
- Net Income: –71%
- Sales Drop: –50,000 vehicles vs. Q1 2024
- After-Hours Stock Move: +4%
As Tesla grapples with a historic profit slump, trade tensions and rising competition, Musk’s recommitment to the company offers a potential catalyst for tesla stock. Investors will be watching closely for the costed details of upcoming models and progress on the robotaxi project as signs of a turnaround.
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