Tesla’s first quarter results fell short of Wall Street’s expectations, as management attributed the decline in vehicle deliveries and revenues to a global production changeover for the Model Y and external pressures affecting the brand. CFO Vaibhav Taneja highlighted that simultaneously updating all factories for the Model Y was “not a small feat,” resulting in several weeks of lost production and delayed availability of the updated vehicle in key markets. Additionally, Taneja cited the negative impact of “vandalism and unwanted hostility” toward Tesla’s brand in certain regions, and explained that auto margins declined due to lower deliveries and fixed cost absorption. Despite these challenges, Tesla’s energy storage segment achieved a record gross profit, and management pointed to continued investments in AI and new vehicle programs as positioning the company for long-term growth.
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Tesla (TSLA) Q1 CY2025 Highlights:
- Vehicles Delivered: 336,681 vs analyst estimates of 366,248 (8.1% miss)
- Revenue: $19.34 billion vs analyst estimates of $21.13 billion (8.5% miss)
- Operating Profit (GAAP): $399 million vs analyst estimates of $970.9 million (58.9% miss)
- Automotive Revenue: $13.97 billion vs analyst estimates of $15.39 billion (9.2% miss)
- Energy Revenue: $2.73 billion vs analyst estimates of $3.04 billion (10.2% miss)
- Services Revenue: $2.64 billion vs analyst estimates of $2.74 billion (3.8% miss)
- Gross Margin: 16.3%, down from 17.4% in the same quarter last year
- Operating Margin: 2.1%, down from 5.5% in the same quarter last year
- Market Capitalization: $1.06 trillion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Tesla’s Q1 Earnings Call
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Pierre Ferragu (New Street Research) asked why Model 3 and Model Y have not gained higher market share, despite their competitive advantages. CEO Elon Musk responded that in the near future, most people may not buy cars at all, as autonomous transportation becomes more prevalent.
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Emmanuel Rosner (Wolfe Research) questioned what is still required for Full Self-Driving (FSD) to reach true unsupervised autonomy. Management explained they are addressing rare intervention cases and focusing initial deployment in Austin before expanding to other markets.
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Edison Yu (Deutsche Bank) inquired about the supply chain challenges for scaling Optimus humanoid robot production given new tariffs. Musk noted that further localization is underway but acknowledged uncertainty about the precise supply chain composition until ramp-up progresses.
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George Gianarikas (Canaccord Genuity) asked if Tesla will introduce tiered pricing for unsupervised FSD features. CFO Vaibhav Taneja indicated pricing adjustments are under consideration, and Musk said the value of unsupervised autonomy will likely drive future price increases.
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Colin Langan (Wells Fargo) pressed on technical risks around Tesla’s camera-based autonomy approach in adverse conditions. Musk detailed advances in photon-counting technology to address sun glare and low visibility, arguing that Tesla’s system can outperform human drivers in challenging environments.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be watching (1) the successful launch and scaling of robotaxi services in Austin and potential expansion to other US cities, (2) the rate of new affordable model production and consumer adoption, and (3) execution on energy storage growth amid shifting tariff and supply chain dynamics. Progress in FSD software reliability and the early ramp of Optimus robots in factory settings will also be key indicators of Tesla’s ability to achieve its strategic objectives.
Tesla currently trades at $317.53, up from $238.15 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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