Tesla reports 20% drop in auto revenue as first-quarter results miss Wall Street estimates

Elon Musk, the CEO of Tesla, was seen wearing a hat that read ‘Trump Was Right About Everything!’ while attending a cabinet meeting at the White House in Washington, D.C., along with U.S. Trade Representative Jamieson Greer and Central Intelligence Agency Director John Ratcliffe on March 24, 2025.

In its first-quarter earnings report, Tesla fell short of expectations with a 20% decrease in automotive revenue compared to the previous year. Key numbers from the report included adjusted earnings per share of 27 cents versus the estimated 39 cents, and revenue of $19.34 billion as opposed to the estimated $21.11 billion.

The company attributed the revenue decline to the update of production lines at its vehicle factories to introduce a new version of the Model Y SUV, as well as lower average selling prices and sales incentives affecting revenue and profit. Net income also dropped significantly by 71% to $409 million, or 12 cents per share.

Tesla is facing challenges in 2025, with Musk spending time in the White House overseeing efforts to downsize the federal government under President Trump’s administration. Concerns have arisen due to the president’s tariffs plan impacting costs for crucial components in electric vehicle production.

The company refrained from predicting growth for the year and stated it will review its 2025 guidance in the second-quarter update. Tesla’s shares have declined by 41% this year, with the worst quarterly drop since 2022. However, after President Trump mentioned he has no intentions of firing Federal Reserve Chair Jerome Powell, the stock saw a 5% increase in extended trading.

Tesla warned investors about uncertainties in the automotive and energy markets due to evolving trade policies affecting global supply chains and cost structures. The company acknowledged the potential near-term impact on demand for its products due to changing political sentiments.

Despite facing protests and declining deliveries, Tesla aims to launch its first driverless ride-hailing service in Austin, Texas, in June. The company also plans to initiate the production of humanoid robots in Fremont, California, this year.

Operating income in the quarter fell by 66% compared to the previous year, with an increase in expenses related to AI projects contributing to the decline. Tesla recorded revenue from environmental regulatory credits, energy generation, and storage. The company emphasized the growth in AI infrastructure benefiting its energy storage products.

During an analyst call, Musk stated that Tesla is the least affected by tariffs among car companies but expressed a preference for predictable tariff structures, free trade, and lower tariffs.