Tesla's Q1 Revenue Misses Expectations, Stock Stable

Tesla released a disappointing first-quarter financial report, with key performance indicators falling short of expectations due to a significant drop in vehicle deliveries. The company's revenue, profit, and other core financial metrics were all substantially lower than anticipated.

Tesla's financial report highlighted the impact of tariff policies, indirectly criticizing the trade policies of the previous administration. Despite a nearly 50% drop in stock price over the past four months, Tesla's investors seemed resilient to the performance setback. Following the release of the financial report, Tesla's stock price remained relatively stable in the first hour of after-hours trading. It is reasonable to infer that the market is waiting for comments from Elon Musk during the earnings call, including any mention of exiting the previous administration's policies.

The financial report showed that Tesla's revenue for the first quarter of this year was only $19.335 billion, significantly lower than the market's expectation of $21.348 billion. In comparison, the company's revenue for the first quarter of last year was $21.3 billion, and for the fourth quarter of last year, it was $25.7 billion.

The primary reason for the decline in performance was the sharp decrease in vehicle sales. Previous delivery data indicated that Tesla's total delivery volume for the first quarter was 336,681 units, a 13% year-over-year decrease, marking the worst quarterly performance since 2022. As a result, revenue from the automotive business was only $13.967 billion, down 20% year-over-year. Although the energy and storage business achieved a 67% year-over-year increase in revenue ($2.73 billion), it was not enough to change the overall trend of the financial report.

Meanwhile, due to increased investment in research and development projects such as AI, the company's operating expenses did not decrease but instead increased, leading to a 66% year-over-year drop in operating profit to $399 million. The operating profit margin was only 2.1%, down 343 basis points year-over-year. The adjusted earnings per share were only $0.27, down 40% year-over-year, compared to the market's expectation of $0.43.

In other words, without the $595 million earned from selling regulatory credits (carbon emission credits) in the first quarter, Tesla would have reported a loss.

As the highlight of this earnings season, the market also closely watched how Tesla would assess the impact of "tariffs" on its business. The company stated in the financial report that the rapidly changing trade policies have had an adverse effect on the global supply chain and Tesla's cost structure, increasing uncertainty in the automotive and energy markets. This dynamic, combined with changes in political sentiment, could significantly impact Tesla's product demand, especially in the short term.

Tesla also disclosed that the current tariff situation has a greater impact on the energy business than on the automotive business. The reason behind this is that Tesla's large-scale energy storage battery, Megapack, uses phosphate iron lithium batteries imported from China. In contrast, all Tesla vehicles sold in the United States are assembled locally, although they are also affected by import tariffs on components.

As expected, Tesla's latest financial report did not mention any expectations for the automotive business to resume growth. In the previous quarter's earnings call, the company had expected the automotive business to resume growth by 2025. Tesla stated that it is currently difficult to assess the impact of changes in global trade policies on the supply chain, cost structure, and demand. The company will re-evaluate the 2025 guidance in the second-quarter financial report.

In the financial report, Tesla also disclosed that the production of the affordable new car model is still scheduled to begin in the first half of 2025. The new car model will integrate the technology of the next-generation platform and the current platform and share the existing production line. This approach allows for cautious expansion of production capacity during uncertain times and makes full use of the current expected maximum production capacity of nearly 3 million units. Before investing in new production lines, the production volume can be increased by more than 60% compared to 2024.

Tesla also expects the Cybercab, an autonomous taxi, to enter mass production in 2026. The financial report also disclosed that the Robotaxi will begin trials in Austin, Texas, in June of this year. This year, the Optimus robot will also begin trial production at the Fremont factory, and more robots performing actual work will be deployed in the factory. The financial report also included a photo of the Optimus trial production line.

Tesla also disclosed that its lithium refining plant and cathode material production plant in Texas are expected to begin production this year.