Tesla Q1 Results: Net profit drops 71%, revenue falls 9%but What are the reasons behind it

Tesla’s Q1 revenue dropped 9% to $19.38 billion. Operating income was $399 million.

Tesla said it reported a 71% annual decline in sales as its automotive division cut production. Geopolitical uncertainty has weighed on the electric vehicle (EV) maker. Tesla reported $409 million in revenue between January and March, missing analysts’ expectations.

Tesla Net Profit Slips 9%

According to research by financial markets data and infrastructure, quarterly revenue fell 9% to $19.38 billion from a possible $21.11 billion. But Tesla’s operating income was $399 million.

According to research by financial markets data and infrastructure, Tesla delivered 336,681 vehicles in Q1 2025, a 12.9% decrease compared to Q1 2024. Some changes, such as line upgrades and model changes, have led to a decrease in vehicle sales, which has directly affected Tesla’s revenue.

One of the biggest reasons behind Tesla’s net profit and revenue decline is the drop in average selling prices. This, along with lower deliveries, has led to a 20% drop in automotive revenue. It fell from $17.4 billion in Q1 2024 to $13.9 billion in Q1 2025.

Tesla’s consolidated revenue is just 27 cents per share. Tesla Motors’ gross margin, excluding controlled credit, fell to 12.5% ​​from 13.65%, according to Reuters calculations.

Tesla’s global supply chain has been hit by rapid trade policy changes and tariff increases, which are the main reasons for disruptions to its global supply chain and the increase in prices. Tesla builds its cars domestically but relies on imported components due to tariff increases. Some experts are pointing to political sentiment and trade uncertainty as reasons for Tesla’s demand.

“As rapidly changing trade policy negatively impacts the global supply chain and cost structure of Tesla and our peers, uncertainty in the automotive and energy markets continues to increase,” the company said.

Shortly, “this dynamic and shifting political sentiment could have a meaningful impact on demand for our products,” the statement continued.

Tesla CEO Elon Musk has said he will reduce his time assigned to the Trump administration and spend more time running the company.

Musk said on a conference call with analysts Tuesday that “now that the major work of establishing the Department of Government Efficiency (DOGE) is done,” he will be “allocating far more of my time to Tesla” starting in May. According to AFP, Musk now plans to spend only “a day or two per week on government matters”.

After-hours trading was up 4% just before Tesla CEO Elon Musk’s conference call began, but Musk’s comments led to a 5.5% increase.