Tesla reported a sharp 71% drop in first-quarter net income on Tuesday, significantly missing revenue expectations and raising new questions about the electric carmaker’s financial trajectory.
The company’s total revenue for Q1 2025 fell 9.4% year-over-year to $21.3 billion, around $1.8 billion short of Wall Street forecasts. Tesla also reported a net income decrease to $409 million, a steep decline from $1.39 billion in the same period last year.
Deliveries of the Model 3 and Model Y — Tesla’s flagship models — dropped 16% compared to the previous year. The company’s “other models” category, which includes the Cybertruck, saw an even steeper decline of 24%.
One of the few financial bright spots was Tesla’s regulatory credits, which brought in $595 million. Without those, the company would have reported a loss, according to industry publication Electrek.
In its investor letter, Tesla attributed part of its downturn to global political and economic uncertainty, citing trade policy changes and political headwinds.
“Uncertainty in the automotive and energy markets continues to increase as rapidly evolving trade policy adversely impacts the global supply chain and cost structure,” the company wrote.
Tesla CEO Elon Musk, who has faced scrutiny for his political activity and close ties to the Trump administration, reportedly will scale back his involvement with DOGE to focus on Tesla.
In the earnings call with investors, Musk sought to downplay concerns.
“We are not on the ragged edge of death,” he said, adding that Q1 tends to be slower due to weather-related shopping patterns.
Tesla shares rose 5% in after-hours trading despite the disappointing report, continuing a pattern of volatility that many analysts say has become detached from the company’s fundamentals.
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