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Tesla (TSLA) reported weaker-than-expected first-quarter results on Tuesday, April 22, falling short of analysts’ revenue and profit estimates as the electric vehicle (EV) market leader struggles with slowing demand and increasing competition. Tesla’s first-quarter results also showed the consequences of negative sentiment in some regions toward the Tesla brand, which stemmed in part from Elon Musk’s widely publicized government work with the Department of Government Efficiency (DOGE).
Valued at $765 billion, Tesla stock is down 38.6% year-to-date.
Despite the miss, CEO Elon Musk reiterated his ambitious vision for Tesla’s future, shifting investor attention away from short-term challenges and toward the company’s long-term focus on autonomy and artificial intelligence (AI)-driven growth. Let’s dive into the details.
Tesla’s Q1 Performance Missed the Mark
Tesla posted Q1 revenue of $19.3 billion, down 9% year-over-year and missing consensus estimates of $20.98 billion. Adjusted earnings per share came in at $0.27, missing estimates of $0.44 and declining 40% year-over-year. The company’s gross margin fell to 16.3% from 17.4% a year ago, owing to price cuts across Tesla’s vehicle lineup and higher operating costs resulting from AI and other R&D projects. Tesla’s energy storage business has long eclipsed its core automobile business. Automotive revenue fell 20% during the quarter, while energy generation and storage revenue increased 67%, as did services and other revenue by 15%.
Earlier this month, Tesla reported a 13% year-over-year decrease in vehicle deliveries to 336,681, with a 32% sequential decline. In the first quarter, total production reached 362,615 units, down from 433,371 units the previous year. Tesla cited a partial impact from the Model Y update across all four vehicle factories, as well as a “negative impact of vandalism and unwanted hostility” toward the Tesla brand in certain markets, as key factors influencing output.
The Road Ahead: Autonomy, Robotics, and AI
Musk spent much of the earnings call talking about the future, painting a rosy picture of Tesla as the world’s most valuable company thanks to advances in autonomy and robotics. He announced the upcoming launch of robotaxi services in Austin in June. These cars, which have Tesla’s Full Self-Driving (FSD) capabilities, are expected to start offering paid rides this summer.
Musk predicted that millions of Tesla vehicles would be operating autonomously by the second half of 2025, reinforcing Tesla’s belief that autonomy will soon become the norm across its fleet. Furthermore, Tesla’s Cybercab project is moving forward with its B sample validation phase, with major production builds expected by the end of Q2. Furthermore, Musk stated that Tesla intends to have thousands of Optimus units in its factories by the end of the year and aims to scale to 1 million units per year by 2030, or possibly sooner.
On the affordability front, Tesla is still on track to introduce new, lower-cost models this year. Concerning liquidity, the company is sufficiently funded to carry on its long-term capacity expansion plans. At the end of the quarter, it had $37 billion in cash, cash equivalents, and investments and free cash flow of $664 million.
Concerning tariffs, Musk reiterated Tesla’s long-standing strategy of localizing supply chains to reduce risk and costs, claiming that the company is the least vulnerable automaker to tariffs globally. Still, he acknowledged that tariff decisions are up to the president, and he will continue to advocate for lower trade barriers. Musk also stated that he will spend less time in Washington and more time on Tesla moving forward.
Analysts expect Tesla's revenue to rise by 8.6% in 2025, followed by a 4.4% increase in earnings. Revenue and earnings may increase by 19.8% and 31.8% in 2026, respectively.
Is Tesla Stock a Buy on Wall Street?
Wall Street analysts rate Tesla stock a “Hold” overall. Of the 41 analysts covering the stock, 16 recommend it as a “Strong Buy,” three as a “Moderate Buy,” 12 as a “Hold,” and 10 as a “Strong Sell.” The average analyst target price of $303.08 indicates a 21% increase from current levels. The high price estimate of $488 implies that the stock can rise by 91% in the next 12 months.
The Bottom Line on Tesla Stock
Tesla’s rocky first-quarter results highlight the short-term costs of long-term ambition. With significant investments in autonomy, AI, and energy, the company is betting big on a future that extends far beyond cars. The next few quarters will be critical for proving its technology, maintaining margins, and reassuring investors about its long-term strategy. As Musk said:
“We’re not on the ragged edge of death, not even close. So – but there are some challenges, and I expect that this year will be, there will probably be some unexpected bumps this year. But I remain extremely optimistic about the future of the company.”
The company will have to prove that its futuristic technology can help Tesla overcome those bumps. Management will provide full-year 2025 guidance in the next quarter. For now, I believe the stock is a “Hold” until its financials improve.
On the date of publication, Sushree Mohanty 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.
