What is Tesla’s financial performance for the first quarter of 2025

Tesla Q1 2025 Financial Performance: Deep Dive

Tesla’s Q1 2025 earnings report sent shockwaves through the market, with key metrics missing expectations and net profit plunging 71% YoY—its worst quarterly performance since 2020. Here’s a comprehensive analysis:

I. Key Financial Metrics

1. Revenue & Profit Collapse
   • Total Revenue: $19.335 billion (-9% YoY), far below expectations ($21.348 billion).
   • Net Profit: $409 million (-71% YoY), just 36% of consensus estimates ($1.132 billion).
   • Operating Profit: $399 million (-66% YoY), with operating margin collapsing to 2.1% (vs. 11.4% in Q1 2024).
2. Margin Pressures Persist
   • Gross Margin: 16.3% (-1.1 pp YoY), marking six consecutive quarters of decline.
   • Auto Gross Margin (ex-credits): 12.5%, slightly above estimates (12.3%) but near historic lows.
   • Average Revenue Per Vehicle: $40,000 (ex-credits), up 0.5% QoQ, signaling slower price cuts.
3. Cash Flow & Expenses
   • Free Cash Flow: -$2.53 billion (first negative since Q3 2022), driven by inventory buildup and capex.
   • R&D Spending: $1.41 billion (+22% YoY), focused on FSD V13 and Optimus.
   • Operating Expenses: $2.75 billion (+18% YoY), with AI investments accounting for 40%.

II. Root Causes of the Decline

1. Auto Business: Volume & Pricing Collapse
   • Deliveries: 336,700 units (-13% YoY), the lowest since Q2 2022. Model 3/Y: 323,800 units (96.2%); Cybertruck: 12,900 units.
   • Price War: Model Y base price dropped 15% vs. Q1 2024 to counter BYD and Zeekr.
   • Capacity Utilization: Berlin and Texas factories lost weeks to Model Y retooling; Shanghai exports fell 21% YoY.
2. Cost Inflation
   • 4680 Battery Delays: Nevada plant yield stuck at 65%, keeping battery costs elevated.
   • Lithium Price Rebound: Spodumene prices surged 50% (Q1 2024: $8,000/ton\to$12,000/ton).
   • Logistics & Tariffs: Red Sea disruptions raised Europe shipping costs by 30%; U.S. hiked China EV tariffs to 35%.
3. Strategic Pivot Pains
   • AI Overdrive: Dojo supercomputer expansion burned $5+ billion in capex; FSD R&D hit 8% of auto revenue.
   • Robotaxi & Optimus Losses: $720 million operating loss in Q1, with no commercialization timeline.

III. Segment Performance Breakdown

IV. Strategic Shifts & Outlook

1. Product Line Revamp
   • Model 2.5: $25,000 entry-level EV targeting H1 2025 production; Shanghai plant allocated 200k units/year.
   • Cybertruck Ramp: Targeting 2,000 units/week by Q3; battery supply remains bottlenecked.
2. Tech Breakthroughs
   • FSD Global Rollout: Shadow testing launched in China; EU regulatory exemption talks ongoing.
   • Optimus Commercialization: Plans to deliver 1,000 warehouse robots to Amazon by late 2024.
3. Cost-Cutting Moves
   • Next-Gen Gigacasting: New chassis tech to reduce parts by 30%, targeting $2,000/vehicle cost savings.
   • Mexico Gigafactory: 1 million annual capacity for Model 2.5 and Robotaxi; production starts 2025.
4. Leadership Shakeup
   • Musk to reduce political activities and focus on operations; two AI experts join the board.

V. Risks & Market Debate

1. Identity Crisis: Investors question Tesla’s shift from automaker to “AI + robotics” amid unclear monetization paths.
2. Geopolitical Risks: U.S.-China-EU trade tensions threaten global supply chains.
3. Cash Burn: Free cash flow could sink to -$5 billion in Q2 if deliveries miss 400k units.

VI. Analyst Sentiment

Key Takeaways

Q1 2025 marks Tesla’s pivot into a high-stakes transformation:

• Short-term: Auto business struggles, AI costs bite.
• Long-term: Model 2.5, FSD, and energy storage hold promise.

Critical Catalysts to Watch:

1. Model 2.5 Launch (H1 2025).
2. FSD Regulatory Approval (China/EU).
3. 4680 Battery Yield (target: 90% by late 2025).

Investors must balance innovation potential against mounting financial risks. The next 12 months could define Tesla’s “second act.”