Tesla’s anticipated first-quarter 2025 earnings, set for release on April 22, signal a slight decline in net profit to below $1.1 billion, down from the same period in 2024, intensifying scrutiny on CEO Elon Musk’s divided attention between the automaker and his advisory role in President Trump’s administration, reports The New York Times.

Slumping Sales and Market Share Erosion

Global Tesla sales dropped 13% year-over-year in Q1 2025, with 425,000 vehicles delivered compared to 489,000 in Q1 2024. Total 2024 sales reached 1.7 million, down from 1.8 million in 2023, far from the company’s earlier goal of 20 million annual sales by 2030. Intense competition from Chinese automakers like BYD, alongside offerings from General Motors, Volkswagen, and Hyundai, has eroded Tesla’s market share. The Cybertruck, Tesla’s latest model, saw a 50% sales drop from Q4 2024, with discounts up to $8,500 (from a $70,000 base price) signaling weak demand, according to Cox Automotive.

Musk’s Political Role Sparks Backlash

Musk’s leadership of the Department of Government Efficiency, which has cut federal budgets and jobs, has drawn protests at Tesla dealerships worldwide, with reports of vandalism and vehicle burnings. His alignment with far-right causes has alienated some liberal and centrist buyers, contributing to sales declines. “Musk’s political involvement is a double-edged sword,” said industry analyst Susan Carter. “It amplifies his influence but risks Tesla’s brand among key demographics.”

Tariff Impacts and Production Dynamics

Unlike competitors, Tesla’s U.S. factories in California and Texas produce all vehicles sold domestically, insulating it from Trump’s auto tariffs. However, imported parts from Mexico and China, critical to these factories, face new tariffs, potentially raising prices or squeezing margins. Tesla’s Shanghai and Berlin plants serve global markets, but escalating U.S.-China trade tensions, including Trump’s proposed tariffs and China’s mineral export restrictions, threaten supply chains. “China’s suspension of critical mineral exports to the United States was ‘concerning,’” Musk noted on April 14, highlighting vulnerabilities.

Autonomous Driving: High Stakes, Uncertain Returns

Tesla’s pivot to artificial intelligence and autonomous driving, particularly its “Cybercab” robotaxi vision, faces skepticism. Musk claims this technology could generate trillions in revenue, but Tesla lags behind Waymo, which completed 200,000 weekly paid rides in four U.S. cities in March 2025. Chinese firms also lead in autonomous tech development. Analysts question Tesla’s timeline, with Uber’s $12 billion 2024 revenue underscoring the gap between Musk’s projections and current market realities.

Delayed Affordable Model Adds Pressure

Tesla promised a lower-cost vehicle by June 2025 to revive sales, but no prototype or details have emerged, making the deadline unlikely. Speculation suggests it may be a simplified Model 3 or Model Y rather than a new design, potentially limiting its market impact. At $70,000 (£53,000; €65,000), the Cybertruck’s price excludes many buyers, even with incentives.

EVXL’s Take

Tesla’s challenges reflect broader EV market dynamics: intensifying competition, economic pressures, and geopolitical risks. Musk’s political role, while amplifying his influence, risks further alienating buyers in a polarized climate. The delayed affordable model and Cybertruck’s struggles underscore the need for Tesla to refocus on innovation and affordability to reclaim momentum. While its AI ambitions are bold, execution lags behind competitors, and investors may demand clearer progress. Tesla remains a leader but must navigate these headwinds with precision to sustain its valuation, now down 50% since December 2024.

Foto's met dank aan Tesla.