Key events
Johana Bhuiyan
Analysts attribute Tesla’s overall difficulties to a number of factors, but ultimately conclude Musk’s role in the White House has caused a branding crisis for Tesla. The company is at a major crossroads, analysts say, that will only be remedied if Musk leaves his role in Doge and returns to Tesla as CEO full-time.
In addition to a drop in sales, a 50% dip in share prices, existing Tesla owners are looking to sell their vehicles in droves, Teslas have been vandalized across the country and in response to ongoing protests of the automaker, the Vancouver International Auto show removed the electronic carmaker from its March lineup. The company also recalled 46,000 Cybertrucks – nearly all that had been sold.
Musk said that the drop in demand is due to the macro economic trends – not branding. “Tesla is not immune to the macro demand for cars,” Musk said. “When there is economic uncertainty, people generally want to pause on doing a major capital purchase like a car. Absent macro issues we don’t see any reduction in demand.”
Analysts are not convinced.
“If Musk leaves the White House there will be permanent brand damage … but Tesla will have its most important asset and strategic thinker back as full-time CEO to drive the vision and the long term story will not be altered,” read a Wedbush Securities analyst note. Wedbush remained bullish on the company’s chances of turning its financials around. “IF Musk chooses to stay with the Trump White House it could change the future of Tesla/brand damage will grow.”
The company declined to provide forward-looking guidance for the next quarter citing “shifting global trade policy on the automotive and energy supply chains”.
“While we are making prudent investments that will set up both our vehicle and energy businesses for growth, the rate of growth this year will depend on a variety of factors, including the rate of acceleration of our autonomy efforts, production ramp at our factories and the broader macroeconomic environment,” the earnings report reads. “We will revisit our 2025 guidance in our Q2 update.”
The company did warn, however, that “changing political sentiment” could meaningfully impact short-term demand for Tesla products.
Johana Bhuiyan
Though Elon Musk has acknowledged there have been “rocky moments” of late, he remained optimistic about Tesla’s future.
“The future for Tesla is better than ever,” he said. “The value of the company is delivering sustainable abundance with our affordable AI-powered robots. If you say, what’s the ideal future that you can imagine, that’s what you’d want. You’d want abundance for all in a way that’s sustainable, that’s good for the environment. Basically this is a happy future, this is the happiest future you can imagine.”
That “happy future” includes the company’s plans for fully self-driving cars, said the billionaire CEO as he laid out an ambitious timeline for when he expects the vehicles to hit US roads in some cities – “by the end of the year”. Tesla has historically struggled to meet timelines Musk has publicly set for the launch of new products, especially when it comes to self-driving.
“The acid test is, can you go to sleep in your car and wake up in your destination and I’m confident that will be available in many cities in the US by the end of this year,” he said.
This would be on top of the Robotaxi service the company plans to roll out in June. “I predict that there will be millions of Teslas operating fully autonomously in the second half of next year,” Musk said.
Despite missing Wall Street expectations on the top and bottom line, initial analyst reactions are optimistic given many had significantly lowered their expectations after the company reported a massive dip in vehicle deliveries.
“Against the backdrop of catastrophic expectations, with everything from sales to margins projected to continue the slump, the less-than-bad numbers have been received as welcome news by Tesla investors,” said Thomas Monteiro, senior analyst at Investing.com.
Monteiro continued:
In a curious turn of events, it’s as if numbers show that even at the worst moment, Elon and the team’s operation can still bring a robust $19.3bn in revenue, with total revenue partly making up for the huge drop in auto revenue.
If this is the worst it gets for Tesla, then certainly there must be some upside for the stock once tailwinds, such as the highly awaited cheaper model and the Robotaxi, finally hit the market later this year.
Tesla investors relieved after Musk says he will pull back in Doge role
The Tesla chief executive, Elon Musk, said he will start pulling back from his role at the so-called “department of government efficiency” (Doge) starting in May. Musk’s remarks came as the company reported a massive dip in both profits and revenues in the first quarter of 2025 amid backlash against his role in the White House.
Investors were relieved after Musk said he would scale back his government work and spend more time at Tesla, reported Reuters.
While the move is welcome one investor told the news agency, they added that it did not go far enough. Shawn Campbell, an adviser and investor at Camelthorn Investments who holds Tesla shares, told Reuters:
I think more attention by Musk on Tesla is a net positive for the stock, but to see a meaningful move in the stock we would need to see a headline more like ‘Musk to leave DOGE to refocus on Tesla’.
Tesla saw a 9% drop in revenue year over year in the first quarter of 2025. The company brought in $19.3bn in revenue, well below Wall Street expectations of $21.45bn. The company reported an earnings per share of 27 cents, also well under investor expectations of 43 cents in earnings per share.
Tesla profits also slid 71% to $409m compared with $1.39bn in net income the previous year.
The company suffered a 13% drop in vehicle deliveries, making it the company’s worst quarter since 2022. Tesla closed the quarter with 336,681 vehicles delivered.
“Starting probably next month, May, my time allocation to Doge will drop significantly,” Musk said on an investor call.
That said, he expects to spend one to two days a week continuing to do what he referred to as “critical work” at Doge “for as long as the president would like me to do so and as long as it is useful”.
More on this story in a moment, but first, here are some other developments:
-
Donald Trump has said tariffs on goods from China will be reduced “substantially” but “won’t be zero”, after US treasury secretary Scott Bessent said he expects a “de-escalation” in the trade war between the world’s two largest economies. Trump placed import taxes of 145% on China, which countered with 125% tariffs on US goods, causing volatility in the stock market and concern about slowing global economic growth.
-
Bessent has said that he expects a “de-escalation” in the trade war between the US and China and that the high tariffs are unsustainable. “I do say China is going to be a slog in terms of the negotiations,” Bessent said, according to a transcript obtained by the Associated Press. “Neither side thinks the status quo is sustainable.”
-
Trump’s tariffs have unleashed a “major negative shock” into the world economy, the International Monetary Fund has said, as it cut its forecasts for US, UK and global growth.
-
Trump has said he has no plans to fire the Federal Reserve chair, Jerome Powell. The president’s comment comes days after he called the central bank boss a “major loser” whose “termination cannot come fast enough”.
-
The secretary of state, Marco Rubio, has announced a proposed reorganisation of the US state department as part of what he called an effort to reform it amid criticism from the Trump White House over the execution of US diplomacy.
-
The embattled US defense secretary, Pete Hegseth, has defended his most recent use of the encrypted messaging app Signal to discuss sensitive military operations, blaming fired Pentagon officials for orchestrating leaks against the Trump administration.
-
The US health secretary, Robert F Kennedy Jr, on has called sugar “poison” and recommended that Americans eat “zero” added sugar in their food. He acknowledged that the federal government was unlikely to be able to eliminate it from products, but said better labeling was needed for foods and that new government guidelines on nutrition would recommend people avoid sugar completely.
-
Congressional lawmakers denounced the treatment of Mahmoud Khalil and Rümeysa Öztürk, the students being detained by US immigration authorities for their pro-Palestinian activism, as a “national disgrace” during a visit to the two facilities in Louisiana where each are being held.
-
More than 150 presidents of US colleges and universities have signed a statement denouncing the Trump administration’s “unprecedented government overreach and political interference” with higher education – the strongest sign yet that US educational institutions are forming a unified front against the government’s extraordinary attack on their independence.
Source link
