# Tesla’s Q1 Profits Plummet 71% Amidst Sales Slump and Musk Controversy

## Tesla’s Q1 Profits Plummet 71% Amidst Sales Slump and Musk Controversy

Tesla’s financial performance took a significant hit in the first quarter of 2025, with profits dropping a staggering 71%, according to the company’s earnings report released Tuesday. The electric vehicle (EV) giant reported a net income of $409 million on revenues of $19.3 billion, a stark contrast to the same period last year. This downturn is attributed to weakening sales figures and a growing wave of negative sentiment surrounding CEO Elon Musk.

The company delivered just under 337,000 vehicles in Q1, marking its worst delivery numbers in over two years and following its first year-over-year sales decline. The situation was somewhat cushioned by the sale of $595 million in zero-emissions tax credits; without this, Tesla would have reported a loss.

Despite the grim results, Tesla’s stock saw an uptick in after-hours trading. Investors appear to be pinning their hopes on the company’s plans to begin production of a more affordable EV in June and on Elon Musk’s announcement that he will be reducing his involvement with the Department of Government Efficiency (DOGE) to focus more on Tesla. However, Musk clarified that he might continue some involvement with DOGE through the remainder of President Trump’s second term.

During the earnings call, Musk addressed a range of topics, including tariffs, robotaxis, AI, and the future of EVs. TechCrunch provided live updates and analysis of the call.

Tesla cautioned shareholders about the potential impact of the ongoing trade war, specifically highlighting President Trump’s tariffs and the shifting political landscape as factors that could significantly impact demand for its products. The company anticipates that tariffs, primarily targeting China, will disproportionately affect its energy business compared to its automotive sector. While Tesla is implementing strategies to stabilize its business in the medium to long term, it remains uncertain whether it can achieve sales growth this year.

The company reaffirmed its commitment to producing more affordable EVs, stating that production is still slated to begin in June. These new vehicles will leverage aspects of the next-generation platform intended for the robotaxi but will also utilize the existing platform underpinning the Model Y and Model 3. This allows for production on the same manufacturing lines as the current vehicle lineup. This announcement directly contradicts a recent Reuters report claiming a months-long delay for the launch of these low-cost models.

Tesla’s sales face several challenges. Its existing EV lineup, while having received recent facelifts, is considered aging, and the Cybertruck’s performance has fallen short of expectations. Moreover, Musk’s increasingly visible political leanings and association with the Trump administration have fueled a significant backlash against the Tesla brand.

Simultaneously, Musk has shifted the company’s focus towards its ambitious Robotaxi and Optimus robot projects. He aims to launch an initial Robotaxi service in Austin this June, with potential expansion to other cities by the end of the year. However, details regarding the functionality of this service remain scarce.

Despite years of promises, Tesla has yet to demonstrate fully autonomous driving capabilities. A recent report by The Information revealed an internal Tesla analysis projecting long-term financial losses for the Robotaxi program, even if it becomes technically viable.

This follows a worrying trend for Tesla. In Q1 2024, the company’s profits already fell by 55% to $1.13 billion due to a price-cutting strategy and unforeseen challenges. Q2 2024 saw a further 45% profit decrease, impacted by restructuring charges, though this was partly offset by record regulatory credit sales.