Tesla's Q1 2025 Earnings Expected to Decline 4% Year-Over-Year
1min read Tesla Inc. is poised to release its first-quarter financial report for 2025 in the coming days, and investors are preparing for a mixed set of results. The electric vehicle manufacturer has been facing continuous challenges, and the upcoming report is expected to reflect these difficulties. The company's annual vehicle delivery guidance is a key focus area for market participants.
Market forecasts indicate that Tesla's revenue for the first quarter will see a modest year-over-year increase to approximately $217 billion. However, earnings per share are anticipated to decline to around $0.43, down from $0.45 in the same period last year and significantly lower than the $0.73 reported in the previous quarter. This earnings decline is primarily due to a sharp drop in vehicle deliveries, which fell to 336,681 units, marking the company's worst quarterly delivery performance in over two years. Production also decreased, with only 362,000 vehicles manufactured, a 16% reduction from the previous year.
The core automotive business is expected to continue facing profitability challenges. Factors contributing to this include factory retooling for the new Model Y, increased discounting, and incentive measures that are squeezing profit margins. The automotive sales gross margin is anticipated to drop to around 15.8%, a significant decline from last year and far below the long-term target of 25%.
CEO Elon Musk's political activities and the resulting negative brand impact have also contributed to the weakening global demand and shrinking profit margins for tesla. Additionally, intensifying competition, tariffs, and the slowing adoption of electric vehicles are further exacerbating the company's difficulties.
On a positive note, Tesla's energy generation and storage business, driven by strong demand for Megapack and Powerwall products, is expected to be a bright spot. This segment's revenue is projected to see substantial growth. Updates on new vehicle models and the autonomous driving taxi service in Austin, Texas, could also potentially boost Tesla's stock price.
Since the beginning of the year, Tesla's stock price has declined by 37%, marking a roughly 50% drop from its 52-week high. Analysts generally rate Tesla as a "hold," with an average target price that is 20% higher than the current stock price. The upcoming delivery guidance and any updates on new initiatives will be crucial in determining whether Tesla can turn its fortunes around.
