Tesla’s Troubles Mount Ahead of Q1 Print. Is TSLA Stock a Buy, Sell, or Hold?

Electric Vehicle (EV) giant Tesla (TSLA) will release its first-quarter earnings for 2025 after the market closes on Tuesday, April 22. The company heads into the report clouded by a series of negative developments that have soured investor sentiment.

TSLA stock has faced pressure amid growing fears of recession, fueled partly by President Donald Trump’s tariff policies. Compounding concerns are weak sales numbers from key international markets like Europe and China, CEO Elon Musk’s close ties to the Trump administration, and its weak Q1 deliveries.

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Adding to the headwinds, a Reuters report revealed that Tesla’s long-promised affordable electric vehicle faces production delays. While Tesla had pledged affordable models would arrive in the first half of 2025, the timeline has slipped, with production targets moving toward late this year or early next year. This delay could be a significant setback, as the launch of a more affordable EV is crucial to boosting Tesla’s volumes, widening its total addressable market, and reaccelerating growth momentum.

Tesla is grappling with slowing EV demand, fierce competition, and tighter profit margins. In response, the company has leaned heavily into financing and leasing programs to stimulate sales, but these moves have squeezed margins, eroding its once-significant profitability advantage over rivals. As investors look ahead to the Q1 conference call, all eyes will be on any updates regarding the affordable car project and strategies for revitalizing growth.

Tesla: Q1 Expectations

Wall Street’s expectations for Tesla’s Q1 numbers reflect the ongoing challenges. Analysts project earnings of $0.35 per share, flat compared to last year. Soft demand, rising competition, and Tesla’s heavy use of discounts and incentives are expected to weigh on average selling prices, tightening automotive margins. That said, Tesla has surprised before, exceeding earnings expectations in two of the past four quarters, most recently beating estimates by 6.45%.

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Despite the margin pressures, Tesla’s aggressive cost-cutting initiatives offer a silver lining. By improving manufacturing efficiency and sourcing raw materials more effectively, Tesla has reduced its cost per vehicle to below $35,000, helping it better withstand the financial strain from discounted pricing strategies.

Still, cracks are visible. Earlier this month, Tesla reported Q1 global deliveries of 336,681 vehicles, missing consensus estimates. The company blamed the shortfall partly on the retooling of Model Y production lines across its factories but emphasized that the ramp-up of the new Model Y is proceeding well.

Amid these challenges, there are glimmers of hope. Growth in Tesla’s energy generation, storage, and services businesses continues to provide some top-line support, even as core automotive sales struggle.

TSLA Stock: The Road Ahead

Looking beyond the immediate earnings release, Tesla’s long-term story remains solid. The company’s ongoing innovation in artificial intelligence (AI), autonomous driving, and robotics provide a solid platform for multi-year growth.

Tesla is progressing well on Full Self-Driving (FSD) technology, with plans for expansion into Europe and China by 2025. This represents a significant growth opportunity. Meanwhile, Tesla’s Robotaxi service, targeting a U.S. rollout later this year, will open a new revenue stream.

Tesla’s humanoid robot project, Optimus, is scheduled for initial deliveries by late 2026. Meanwhile, Tesla’s growing energy segment is becoming a meaningful contributor to its long-term growth story.

The Bottom Line

Despite short-term turbulence tied to demand, macroeconomic factors, and competitive pressures, Tesla’s diverse portfolio positions it for solid long-term growth.

While Wall Street analysts currently maintain a “Hold” rating on TSLA stock, the recent pullback in Tesla’s share price has helped ease some of the valuation concerns that previously gave investors pause. This pullback could be an entry point for those with a long-term mindset.

Tesla is steadily transforming into a tech-driven powerhouse with significant growth opportunities in the energy, automation, and AI segments. This expanding footprint makes it much more than a car company and positions it well to deliver strong growth in the long run.

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On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.