Tesla's first-quarter profit plummeted by more than 70 percent amid international backlash to Elon Musk and his role in President Donald Trump's administration.
The electric automotive manufacturer and energy company lost $566 million in projected profits after sales in the first three months of 2025 fell short, according to its filing on Tuesday.
Newsweek has reached out to Tesla for comment.
Why It Matters
Since Musk took on his role as de facto head of the Department of Government Efficiency (DOGE), he and Tesla have been linked to the Trump administration's sweeping federal cuts and mass layoffs.
The backlash has led to worldwide boycotts and protests at dealerships, as well as its vehicles being vandalized and Tesla owners being mocked—all of which has led to a drastic drop in sales.
Tesla is also facing tough competition from other electric vehicle (EV) makers, including Chinese rival BYD, which has seen a 75 percent increase in sales across the U.K., Germany and France over the same period.
A recent study by Electrify Research found that Tesla had slipped from being the most desirable EV brand in July 2023 to seventh place behind Audi, Mercedes-Benz, BMW, Toyota, Porsche and Volkswagen.
What To Know
Tesla reported a big drop in first-quarter earnings Tuesday, with quarterly earnings plunging by 71 percent, revenue falling 9 percent to $19.3 billion and total automotive revenue down by 20 percent.
Sales also suffered a 13 percent drop, with global deliveries falling to 336,681 vehicles between January and March from 387,000 a year prior. This marked Tesla's worst quarter for deliveries since 2022.
The company cited "uncertainty in the automotive and energy markets" because of Trump's tariffs, as well as "changing political sentiment" for the lackluster sales. The EV firm said updates to its best-selling Model Y also effected its availability for customers and impacted sales.
Its fourth-quarter results also came in below analysts' estimates, with revenue increasing just 2 percent year-over-year to $25.7 billion, automotive revenue falling 8 percent to $19.8 billion, and net income plummeting 71 percent to $2.3 billion.
Tesla shares saw some recovery on Tuesday, rising 4.6 percent, despite the gloomy report, after a steep drop on Monday. However, the company's shares have been in decline since they peaked on December 17 at 488.54. They have since dropped by more than half to Tuesday's 237.97.
In a recent note, Wedbush Securities analyst Dan Ives warned that Musk faces a "code red situation" if his position as figurehead of DOGE continues to damage the brand image.
"Musk needs to leave the government, take a major step back on DOGE, and get back to being CEO of Tesla full time," he said.
It appears that Musk is heeding the pressure and may be returning to Tesla full time as early as next month.
The Tesla CEO was hired as a special government employee, which means he can work only 130 days in a 365-day time period, setting a deadline of May 30. President Donald Trump has suggested Musk will abide by the rule, saying on April 3 that Musk will be leaving government in "a few months."
Musk said during the earnings call that starting next month, his "time allocation to DOGE will drop significantly."
What People Are Saying
Tesla, in its first-quarter earnings report: "Uncertainty in the automotive and energy markets continues to increase as rapidly evolving trade policy adversely impacts the global supply chain and cost structure of Tesla and our peers. This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term. We remain committed to expanding our business model to include delivering autonomous robots across multiple form factors and use cases – powered by our real-world AI expertise – to our customers and for use in our factories, as we navigate these headwinds."
Wedbush Securities analyst Dan Ives, in a note released Sunday: "If Musk leaves the White House, there will be permanent brand damage...but Tesla will have its most important asset and strategic thinker back as full-time CEO to drive the
vision and the long-term story will not be altered. If Musk chooses to stay with the Trump White House, it could change the future of Tesla...brand damage will grow....A huge week ahead for Musk, Tesla and investors."
Professor Jack Stilgoe, University College London, told Newsweek: "Until now, Tesla's valuation has priced in Elon Musk's claim that what he calls 'full self-driving' is just around the corner. It's a story that seems to have worked pretty until now, even though anyone close to the technology knows that it doesn't work as promised. And, strictly speaking, it can never work as promised. There's no way a Tesla will be able to drive itself in all possible circumstances. It's a form of magical thinking that has kept the company going for years."
President Donald Trump told reporters aboard Air Force One this month: "I want [Elon] to stay as long as possible. There's going to be a point where he's going to have to leave."
What Happens Next
Musk is expected to return to Tesla in a more full-time capacity next month.
