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Highlights

  • Q1 2025 revenue declined 9% year-over-year to $19.3B, mainly due to planned Model Y production line upgrades.

  • Energy storage revenue surged 67%, with Powerwall and Megapack deployments hitting new records.

  • Tesla expanded FSD (Supervised) to China and remains on track for its Robotaxi pilot in Austin by June 2025.

Tesla, Inc. (NASDAQ:TSLA) reported financial results for the first quarter of 2025, revealing a 9% year-over-year drop in total revenue to $19.3 billion, primarily attributed to planned production line upgrades for the revamped Model Y across its four global vehicle factories.

Automotive Down, Energy Up

Tesla's automotive segment faced notable headwinds, generating $14.0 billion in revenue, down 20% from Q1 2024. The company cited a 13% decrease in vehicle deliveries, totaling 336,681 units, alongside a 16% decline in production, as a result of temporary shutdowns for the Model Y updates. Average selling prices were also reduced due to product mix and increased sales incentives.

On a more positive note, Tesla's energy generation and storage business saw robust growth, with revenue climbing 67% to $2.7 billion. Energy storage deployments soared 154% to 10.4 GWh, with the company achieving its fourth consecutive quarterly record for Powerwall installations, crossing 1 GWh for the first time. The newly operational Shanghai Megafactory contributed by producing over 100 Megapacks, which are currently en route to customers.

Services and other revenue grew 15% year-over-year to $2.6 billion.

Profitability Pressured by Lower Sales and FX Impacts

Operating income dropped sharply to $399 million, a 66% decline, while Tesla’s operating margin fell from 5.5% in Q1 2024 to 2.1%. GAAP net income attributable to shareholders stood at $409 million, down 71%, translating to diluted EPS of $0.12. On a non-GAAP basis, net income was $934 million with EPS of $0.27, a 39% decline.

Profitability was impacted by:

  • Decreased vehicle sales and pricing,

  • A negative $0.3 billion foreign exchange effect,

  • Increased R&D spending, especially in AI and autonomy.

Despite these setbacks, free cash flow rose 126% to $664 million, and Tesla ended the quarter with $37 billion in liquidity, a sequential increase of $0.4 billion.

AI and Autonomy Take Center Stage

Tesla highlighted significant progress in AI and self-driving tech. The company launched FSD (Supervised) in China, its first market outside North America. In the U.S., its Model 3, Model Y, and Cybertruck are now autonomously driven from production lines to outbound lots at Fremont and Gigafactory Texas.

Tesla remains on track for a Robotaxi pilot launch in Austin by June 2025, and plans for volume production in 2026. Development of the Optimus robot continues on a pilot line in Fremont.

Future Models and Battery Innovations

Tesla reaffirmed plans to launch more affordable vehicle models in the first half of 2025 using existing and next-gen platforms. While this strategy will lead to less cost reduction than previously expected, it aims to enable more capital-efficient volume growth.

The IRA-compliant 4680 battery cell launched during the quarter makes the Cybertruck eligible for the $7,500 federal tax credit. Tesla also introduced a Long Range Cybertruck variant offering 362 miles of range.

The company’s lithium refining and cathode production plants are expected to begin operations later in 2025.

Outlook

Tesla flagged potential impacts from trade policies affecting its global supply chains and noted it will revisit its 2025 guidance in its Q2 earnings update.