Tesla has reported its financial results for the first quarter of 2025, and the numbers paint a troubling picture. Sales are down across the board, profits have plummeted, and external factors are making things worse. It’s not just about the numbers—it’s also about the growing tension surrounding the brand and the leadership behind it.
Sales drop sharper than expected
The total revenue for the quarter came in at $19.34 billion, marking a 9% decline compared to the same period last year. More concerning, though, is the 71% drop in net profit, which fell to $409 million. Earnings per share stood at just $0.27, significantly under the $0.41 forecasted by analysts.
The automotive division—the heart of Tesla’s business—saw a 20% year-over-year decline in sales, totaling $13.97 billion. Delivery numbers also took a hit. Just over 336,000 units were delivered, which is 13% fewer than during the same period in 2024.
Disruptions in production and a risky transition
The decline in deliveries wasn’t entirely unexpected. Tesla has been working on retooling its production lines for the Model Y across its four main factories. That’s led to production interruptions lasting several weeks. In theory, these updates are meant to streamline manufacturing and cut costs in the long run. But short-term, they’ve clearly had a negative impact on output and revenue.
What’s more, Tesla’s product strategy seems caught in a moment of hesitation. There’s ongoing talk about a new, more affordable variant of the Model Y—internally referred to as E41—with a target price well below the current entry point of $49,000. The idea is to cut production costs by 20% compared to the updated Model Y. The company hopes to build 250,000 units in the US by 2026 before scaling to China and Europe. But will it come in time?
Market fatigue and growing competition
There’s no denying the Model Y has been a strong seller, but it’s also been around for a while. The lineup is starting to feel dated, and new players are emerging fast. BYD, among others, is gaining ground with aggressive pricing and fresh designs.
Tesla’s approach to use existing platforms to develop cheaper variants makes financial sense—especially in avoiding massive new investments. Yet it comes with risks. There’s already talk about sales cannibalization. If buyers flock to the cheaper version, margins could shrink even more. Add to that the halted development of the Cybercab and the Semi, and it’s easy to sense a brand in strategic limbo.
Public image under fire
While the financial results alone are sobering, Tesla is also facing external pressure. The public profile of its CEO—and his recent involvement in the Department of Government Efficiency (DOGE)—has sparked controversy. Ties to the Trump administration have led to backlash, including protests, boycotts, and even vandalism.
On March 18 in Las Vegas, a Tesla Collision Center was set on fire using Molotov cocktails. Several vehicles were damaged and the building was left in ruins. Law enforcement responded by involving anti-terror units and the FBI. Similar incidents occurred in Kansas City and Oregon, including arson and shootings at Tesla dealerships. Investigators now suspect coordinated attacks.
One person is facing federal charges for using incendiary devices across state lines. Another was arrested after torching several charging stations and leaving anti-Trump graffiti. Even outside the US, the mood has soured. In Spain, a Tesla vehicle was vandalized with the message “FUCK ELON” spray-painted on its side.
A challenging road ahead
At a time when Tesla should be focusing on innovation and market leadership, it finds itself on the defensive. From production hiccups and strategic delays to public image issues and growing competition, the challenges are stacking up fast. The launch of the affordable Model Y variant could be a game-changer—but only if it arrives quickly and doesn’t undercut the rest of the lineup.
It’s worth asking: is Tesla still ahead of the curve, or just trying to catch up? The numbers, for now, lean toward the latter. With new players entering the market and public perception shifting, this might be a turning point—for better or worse. Let’s just hope the next quarter tells a different story.
