Elon Musk-owned Tesla’s financial performance in the first quarter (January-March period) of 2025 has been expectedly weak, with net income dropping by 71% to $409 million from $1.39 billion in the same period the previous year. Its total revenue also declined by 9% to $19.3 billion (from $21 billion in Q1 2024), even dropping short of Wall Street’s expectations of $21.5 billion.
This marks Tesla’s weakest quarterly performance since 2022. In the first quarter of this year, the company’s automotive revenue (the income generated from vehicle sales) dropped to $13.9 billion, marking a 20% decline from $17.4 billion in the same period the previous year.
At the same time, the Musk-led company made $595 million from selling regulatory credits, and that money helped make its financial results look better. The company’s gross margins (earnings for each dollar of revenue) have also narrowed, dropping to 16.3% from 17.4% in the previous year.
Interestingly, the downturn is attributed to a combination of factors, including a significant drop in vehicle sales, increased competition in the electric vehicle market (particularly in China), and public backlash against Musk’s political and government affiliations (including DOGE).
During Q1 2025, the vehicle deliveries dropped 13% year-over-year to 336,681 units. This clearly falls well short of analyst expectations, which ranged between 360,000 and 370,000. Experts believe that this decline in sales is partly due to consumer reactions to Musk’s involvement in the Trump administration and his support for certain political figures, which have negatively impacted the company’s brand image, especially in Europe and China.
Additionally, Tesla’s total production for the first quarter of 2025 stood at 362,615 vehicles, compared to 433,371 units produced for the same period in 2024.
Meanwhile, operational challenges have also weakened the company. Production issues, including a recall of 46,000 Cybertrucks, and around 40% drop in Tesla’s share price have added to investor concerns.
However, despite these challenges, Tesla managed to generate $2.2 billion in operating cash flow, indicating some financial stability. The company is also planning to introduce a more affordable Model Y SUV and a driverless robotaxi service in Austin later this year.
But, these initiatives face uncertainties due to newly introduced US tariffs and potential Chinese trade retaliation, which could affect Tesla’s energy storage segment and components sourced from abroad. In fact, last week, the EV maker reportedly suspended new orders for its US-manufactured Model S and Model X vehicles in China amid escalating trade tensions between the two countries.
Even in March, Tesla’s sales of China-made vehicles fell 11.5% year-over-year to 78,828 units, reflecting the growing dominance of Chinese EV brands. Meanwhile, BYD reported a 58% increase in first-quarter deliveries of its battery-electric and plug-in hybrid vehicles.
Content originally published on The Tech Media – Global technology news, latest gadget news and breaking tech news.
