Tesla (TSLA) is set to report its Q1 2025 earnings on Tuesday, with traders bracing for results that could reveal continued pressure across the electric vehicle (EV) market.
Expectations are tempered by a sharp decline in car deliveries, heightened competition, and brand issues related to CEO Elon Musk’s political participation.
Nonetheless, others are counting on more optimistic results stemming from Tesla’s expanding energy storage business and operational advantages.
Earnings Outlook and Consensus Estimates
- Earnings per share: $0.45
- Revenue: $21.85 billion
The company’s earnings season history shows some inconsistency, missing EPS estimates three times in the trailing four quarters. ⁽¹⁾
Key Factors to Watch
- Cost control and margins
- Energy storage growth
- Production recovery
- Delivery forecast
- Guidance and outlook
Tesla delivered 336,681 cars (323,800 Model 3/Y and 12,881 other models) worldwide in the first quarter. This marked the lowest quarterly figure in more than two years.
Sales were down from 495,570 units in the fourth quarter of 2024 and 386,810 in the first quarter of last year. ⁽²⁾
In Q1, Tesla’s US sales fell 9% to about 128,000 cars, while sales in China rose 2% to 135,000. Since China makes up over 20% of Tesla’s 2024 revenue, this modest growth offers some relief amid overall investor concerns. ⁽³⁾
An obvious reason behind Tesla’s soft first-quarter 2025 deliveries was the fact that it had to retool its factories to produce the new version of its Model Y SUV. Also, CEO Elon Musk’s political involvement hasn’t worked in favor of Tesla’s brand image. The anti-Musk sentiment inside the US recently has hurt the company’s sales.
Discounts and incentives are likely to have constrained automotive revenues and gross margins. Analysts forecast $17.48 billion in automotive sales revenue, with gross margins contracting to 15.8%, down 2% from the prior year, driven by discounts and incentives to boost sales.
Meanwhile, rising operating expenses and capital expenditures for factory expansions, Supercharger infrastructure, 4680 battery production, and AI development are likely to further strain profitability. ⁽⁴⁾
Energy Storage and Services: Bright Spots Amid Automotive Weakness
Due to demand from Megapack and Powerwall, Tesla’s Energy Generation and Storage division is expected to develop significantly, deploying 10.4 GWh in Q1 2025, up 156% year over year.
In order to reduce the issues facing the automotive business, analysts predict that sales will reach $2.1 billion, a 70% yearly gain, while the Services/Other unit will reach $2.5 billion, a 13% increase. ⁽⁵⁾
These segments highlight Tesla’s diversified business model, which could reduce some of the pressure from weaker vehicle sales. The energy storage growth in particular supports Tesla’s leadership in renewable energy solutions, a key long-term catalyst.
Tariff Impacts and Economic Pressure
Although its domestic production somewhat reduces the impact, Tesla’s costs have increased as a result of US tariffs announced in Q1 2025, which include a 25% tariff on imported vehicles and parts.
Compared to rivals like Ford and GM, which are bigger importers, Tesla is less exposed to tariffs since 61% of the parts for its vehicles are obtained locally. However, while the business strikes a balance between price increases and discounts to retain demand, Tesla’s reliance on foreign parts, especially for batteries, could raise car prices by 5–10%, thereby compressing margins. ⁽⁶⁾
Economic challenges that threaten Tesla’s overseas sales, which generate a substantial amount of money, include trade war developments and retaliatory tariffs from China and Europe.
Tesla’s image has also suffered due to criticism of CEO Elon Musk’s political engagement, which has resulted in a 13% decline in deliveries to 336,681 cars—the fewest since 2022.
Looking Ahead
Tesla’s Q1 2025 earnings could highlight recent challenges in the EV space, but there’s also room for an upside surprise if results outperform expectations.
In addition to monitoring stock volatility around the earnings announcement, traders and investors should pay attention to any changes regarding Tesla’s position and forecast in the electric vehicle industry.
