Tesla Tumbles as Musk Fandom Friction Slows Sales

Tesla’s Q1 Automotive Revenue Faces a 20% Decline

Key Factors Behind the Dip:

• Lower Vehicle Deliveries – a result of heightened anti‑Musk sentiment and typical seasonal slowdown.
• Factory Retooling – temporary production adjustments that limited output.
• Supply‑Chain Constraints – caused by the ongoing US‑China trade dispute.
• Escalating Costs – rising component prices linked to trade tensions.

Collectively, these challenges led to a notable revenue contraction for Tesla in the first quarter.

Tesla Q1 Earnings: A Sharp Decline Amid Delivery Slump and Political Headlines

Tesla reported a notable year‑on‑year drop in first‑quarter earnings, largely driven by fewer deliveries. The decline is partly attributed to CEO Elon Musk’s recent political involvement.

Revenue and net income both fell short of analyst forecasts. Factory retooling for new models and a general macroeconomic uncertainty dampened demand, contributing to the disappointing performance.

Share Price Reaction

Despite the lackluster results, Tesla shares climbed more than 5% in after‑hours trading. This surge coincided with a broader rally across the equity market, sparked by U.S. President Donald Trump’s statement that he had no plans to dismiss Federal Reserve Chair Jerome Powell.

Annual Performance

• Tesla remains the weakest performer among the so‑called Magnificent Seven tech stocks, falling 34% year‑to‑date.
• Investors will be watching how the company addresses production shifts, product launches, and the potential impact of political commentary on its stock trajectory.

Tesla’s earnings fall sharply

Quarterly Snapshot: Tesla’s Financial Performance in Q1 2025

Key Financial Highlights

• Automotive Revenue
• Down 20% YoY to $14 billion (€12.28 billion)
• Earnings Per Share
• Dropped 40% to $0.27 (€0.23)
• Total Revenue
• 9% decline, now $19.3 billion (€16.92 billion)
• Energy Generation & Storage
• +67% growth, marking a fourth consecutive record for Powerwall deployments

Drivers Behind the Decline

• Fewer vehicle deliveries, partly due to the Model‑Y refresh across all four factories
• Lower average vehicle selling price driven by mix shifts and sales incentives
• Adverse foreign‑exchange effects

Counterbalancing Factors

• Robust expansion in the energy generation and storage segment
• Growth in regulatory credit revenue, providing a partial cushion against revenue drop

Vehicle Delivery Performance

• 336,681 cars shipped in Q1 — a 13% YoY decrease
• Smallest quarterly volume since 2022, highlighting the typical seasonally weak Q1 for Tesla

Energy Sector Outlook

• Consistent upward trend, yet supply bottlenecks and tariffs pose new challenges
• Megafactory Shanghai emerges as a critical player for meeting global energy storage demand amid evolving US cost structures

Insights from CFO Vaibhav Taneja

• Tariffs disproportionately affect energy business due to China’s dominance in battery cell supply
• US-made cells constitute a minor fragment of overall battery supply
• Transitioning to non‑China suppliers will be a gradual process, adding to the time horizon before full mitigation

Musk addresses political backlash

Tesla Faces Growing Public Backlash Over Elon Musk’s Political Engagements

Elon Musk’s recent political initiatives have sparked protests that have echoed on a global scale. Demonstrators have converged outside Tesla showrooms in the United States, across Europe, and in Australia, voicing concerns over Musk’s outspoken support for foreign political movements and his involvement in national policy debates.

Key Controversies

• Alignment with Germany’s AfD: Musk publicly endorsed the far‑right Alternative for Germany (AfD) party, leading to sharp criticism from political analysts and human rights advocates.
• Advice to Former President Trump: He has been reported to counsel the former administration on large federal job cuts, a stance that has drawn criticism from civil‑service unions and economic watchdogs.
• Protester Incentives Claim: During an earnings call, Musk alleged that protestors outside Tesla brand sites received “fraudulent money” or “wasteful largesse,” claims that lacked evidence and were widely discredited by independent observers.

CFO Highlights Impact on Deliveries

The chief financial officer noted that “the negative impact of vandalism and unwarranted hostility towards our brand and people” has adversely affected vehicle deliveries in certain markets, indicating that these challenges are more than symbolic.

Elon Musk’s Public Role in the Department of Government Efficiency (DOGE)

In a recent interview, Musk revised his commitment to the DOGE:

• He promised a significant reduction in his involvement starting in May, with plans for “one or two days a week” as long as the president requires.
• During a Wisconsin event, he acknowledged the personal cost associated with his governmental duties.
• He reiterated support for “predictable tariff structures, free trade, and lower tariffs,” underscoring his consistent policy stance.
• Despite his advisory role, Musk emphasized that he is not the president, distancing himself from executive authority.

Going Forward

Tesla’s leadership and stakeholders are closely monitoring how Musk’s political activities will influence brand perception and operational performance. The company remains committed to navigating these challenges while maintaining its focus on innovation and customer satisfaction.

Robotaxi and Optimus

Tesla’s Upcoming Moves: Full Self‑Driving Expansion & Optimus Development

Full Self‑Driving goes nationwide this summer

• Unsupervised FSD is slated to launch in California and Texas by June.
• Debut will feature the Model Y with a localised parameter set.
• Robotaxi service is expected to roll out in several cities later this year.

Optimus production faces new hurdles

Musk explained that magnet supply shortages could push back the start of manufacturing the AI‑powered Optimus robot. China’s recent curb on rare‑earth exports, a retaliatory move against U.S. tariffs amid the escalating trade war, partly contributes to the delay. Tesla had originally aimed to produce thousands of Optimus units in 2024.