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Tesla posts steep revenue, profit declines amid political distractions and market pressures
Tesla is facing its sharpest financial downturn in years, with both revenue and profit plunging in the first quarter of 2025. The electric vehicle maker reported a 20 per cent drop in automotive revenue and a 71 per cent slide in net income, as CEO Elon Musk continues to divide his attention between the company and his role in U.S. President Donald Trump’s administration. Total revenue came in at $19.34 billion, missing analyst expectations of $21.11 billion, while adjusted earnings per share fell to 27 cents.
The company attributed the weak quarter to multiple factors, including lower average selling prices, higher sales incentives, and production slowdowns due to Model Y line upgrades at its four global factories. Operating income also fell sharply, down 66 per cent to $400 million, with Tesla citing increased spending on artificial intelligence and automation projects. Automotive revenue tumbled to $14 billion from $17.4 billion a year earlier. Without the boost from environmental regulatory credits, the company would have posted a loss on car sales.
Investors have grown increasingly uneasy as Musk has shifted focus toward his role overseeing government cuts and restructuring in Washington. Since the start of the year, Tesla’s stock has dropped 41 per cent and is down more than 50 per cent from its January peak of $450. Wall Street analysts have been quick to question whether Musk’s political ambitions are damaging shareholder value. Tesla has not reaffirmed its 2025 growth targets, saying it will revisit them in the next quarter.
Trade uncertainty and rising tariffs also loom large. Tesla warned that evolving trade policy could impact its global supply chain and cost structure, especially as it relies on foreign suppliers for energy products and key auto components. Despite claiming to be the least affected carmaker by tariffs, Musk told investors he supports predictable trade rules and lower barriers. The company stopped short of providing full-year guidance, reinforcing investor concerns that 2025 may bring further volatility.
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