Tesla saw a sharp 71% drop in profits during the first quarter of 2025, falling short of analyst expectations, according to the company’s earnings report released Tuesday. The decline was driven by slumping sales, a drop in stock value, and growing global backlash against CEO Elon Musk’s political involvement in the Trump administration.
Total revenue for the quarter fell 9% year-over-year to $19.3 billion, while car sales revenue alone dropped 20%. The report comes as some investors urge Musk—whose temporary role in government ends next month—to step down from his post with the Department of Government Efficiency (DOGE) and refocus on Tesla.
Opening Tuesday’s earnings call, Musk defended his government role and responded to protests against Tesla, controversially claiming demonstrators were being “paid fraudulently.” He noted that while his efforts with DOGE are “mostly complete,” he would reduce his involvement starting in May, only dedicating a day or two per week to government work for the remainder of Trump’s term.
Tesla warned that changing political sentiment and ongoing tariffs could hurt demand in the short term. The company also acknowledged that tariffs were impacting its supply chain and cost structure, though it is working on stabilizing operations and managing uncertainty in both the auto and energy sectors.
Despite boasting a more localized supply chain than competitors, Musk noted that Trump’s recent tariffs would still raise the cost of foreign-made parts used in Tesla vehicles. He reiterated his support for lower tariffs but emphasized the final decision lies with the president.
Meanwhile, Tesla’s vehicle deliveries fell 13% in Q1 compared to last year, and 2024 marked the first year-over-year sales decline for the company in over a decade. CFO Vaibhav Taneja cited brand hostility and vandalism as factors hurting performance in certain markets, though the legacy Model Y sold out by the end of February.
As competition heats up—particularly from China’s BYD—Tesla is banking on the upcoming launch of its robotaxi program in Austin this June. However, BYD recently announced its own advancements in self-driving tech for vehicles costing as little as $9,600.
With Tesla shares now worth about half of what they were at their December peak, investor confidence is wavering. Dan Ives of Wedbush called this moment a “fork in the road,” while GLJ Research’s Gordon Johnson warned the company may be facing “operational, financial, and reputational challenges” that signal a deeper crisis.
