Tesla reported a dramatic decline in its financial performance for the first quarter of 2025, with revenues dropping by 20% and net profit plummeting by 71%. Yet, despite these troubling figures, the company’s stock surged, as investors continue to place their faith in Elon Musk’s bold vision of a driverless future powered by robotaxis.
Musk has been vocal about his belief that private car ownership will soon become obsolete, replaced by autonomous transportation services. This vision has captivated investors, even as Tesla refrained from issuing full-year financial guidance — a clear sign of the current uncertainty surrounding the company and the broader market.
Yesterday evening, Tesla released its Q1 2025 earnings. It marked the first full quarter in which Elon Musk has been more engaged in political activities and government advisory roles than in Tesla’s day-to-day operations. Nevertheless, Tesla’s shares jumped nearly 6% in after-hours trading, defying the bleak numbers. Musk painted a futuristic picture where self-driving taxis and humanoid robots become central to daily life. According to him, Tesla will dominate this new technological frontier, with only Chinese companies as real competitors.
Despite missed promises and reputational damage due to Musk’s political involvement, investors are still backing him. The lack of an annual earnings forecast — postponed until Q2 results are released in three months — underscores the difficulty of predicting Tesla’s financial trajectory at this point.
Tesla had previously reported a 13% global decline in vehicle sales for Q1, so the disappointing financials didn’t come as a major surprise. Quarterly revenue fell from $17.3 billion to $14 billion, and net profit dropped from $1.4 billion to $409 million. On a more positive note, revenue from energy storage grew by 67%, and service revenue increased by 15%, helping soften the blow.
The company also spent the quarter preparing a refreshed version of the Model Y — the world’s best-selling electric vehicle. Musk has pledged to scale back his political engagements in Q2, which could help Tesla recover from its ongoing image crisis.
Most investors believe that greater involvement from Musk in Tesla’s core operations could improve financial performance. They still see him as the visionary who accomplished the seemingly impossible with both Tesla and SpaceX. However, his latest ideas may soon be put to the test. In June, Tesla plans to launch a pilot robotaxi program in Austin, Texas, starting with just 10–20 vehicles. Eventually, these steering wheel–free taxis could operate globally on-demand, drastically reducing the need for personal car ownership. Musk also forecasts that his humanoid robot, Optimus, will take over many everyday tasks within five years. Whether this vision becomes reality remains in the hands of investors.
Tesla’s decision to delay its 2025 financial outlook by three months is understandable. Many companies are currently struggling to provide reliable forecasts. During the earnings call, Musk acknowledged that the production of the Optimus robot depends on rare earth metals imported from China. Tesla CFO Vaibhav Taneja added that if former President Donald Trump’s proposed tariffs are implemented, the price of a Tesla vehicle in the U.S. could rise by as much as $2,000 — even though 85% of the car’s components are made domestically.
Trump has announced a 90-day negotiation window for new trade agreements, including with China. The outcome of these talks is uncertain but critical for Tesla, particularly regarding access to key raw materials — something investors may still be underestimating. Musk has publicly urged Trump to ease tariffs, but it remains unclear whether his appeals will be heeded.
In this context, the post-earnings stock price surge can also be interpreted as a vote of confidence — a belief that Trump won’t abandon Musk in this crucial moment. Perhaps, as some speculate, this support could be exchanged for Musk’s continued endorsement of Dogecoin.
Paweł Majtkowski, Market Analyst, eToro
Source: ceo.com.pl
