By Todd Campbell TheStreet
It's been a terrible year for Tesla. The electric vehicle Goliath has suffered a series of blows that have derailed its stock price, frustrated investors, and looted hundreds of billions of dollars off CEO Elon Musk's net worth.
Much of the damage has arguably been self-inflicted. Elon Musk spent big money helping President Trump get elected, and he's since served in a very public role as head of Trump's Department of Government Efficiency, or DOGE, an organization within the executive branch tasked with reducing government spending.
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Musk's political activism has turned him into a lightning rod for controversy, and media coverage of his political opinions has frustrated many of his customers worldwide, causing sales to tumble.
Tesla's stock price has fallen 38% in 2025, including an 8% tumble in April.
While Tesla's quarterly earnings, released after the stock market closed on April 22, were disappointing, Elon Musk did deliver important news that, at least for now, may give investors hope that the worst may be behind them.
Tesla sales data reveal cracks in EV armor
Elon Musk turned Tesla into an aspirational brand by focusing on performance rather than economy. His desire to build fast cars that rival Mercedes Benz, Porsche, and BMW won over the rich and famous and speed enthusiasts worldwide, helping establish EVs as a viable alternative to traditional combustion engine cars.
Related: Surprising sales news sends Tesla stock tumbling
The moat Musk built is shrinking, though. Many of the world's largest car companies were surprised by Tesla's success, allowing Tesla to establish itself as an EV leader. Most have since developed rival EVs, often matching or exceeding Tesla's performance, fit, and finish.
An increasingly competitive marketplace has made it harder for Tesla to maintain its dominance, and Musk's political activism hasn't helped matters.
Sales in key European markets have cratered recently, and California, an important EV market, is experiencing a similar slowdown.
Tesla's China sales dropped 21.8% in Q1, according to the China Passenger Car Association, and in Germany, they tumbled 62%, according to KBA.
In California, which represents about one-third of U.S. EV sales, Tesla registrations were down 15% year-over-year last quarter despite non-Tesla zero-emission vehicle registrations rising 35%, according to California's New Car Dealers Association (CNCDA).
Overall, Tesla's sales volume declined 9% from year-ago levels in Q1, according to Cox Automotive/KBB. Electric vehicle sales were up 11% across all brands in the quarter.
While Tesla stumbled, Detroit's Big Three saw EV sales surge. Ford saw its EV sales climb 11.5%, and GM's Cadillac, GMC, and Chevrolet saw EV sales increase by 37%, 184%, and 114%, respectively.
Tesla quarterly earnings disappoint, but shares skyrocket on Musk's revelation
Unsurprisingly, Tesla's first quarter earnings release had little to excite investors.
First-quarter revenue of $19.34 billion fell 9% year over year and was $2 billion shy of Wall Street analyst estimates.
Related: Key analyst believes Tesla and Elon Musk are running out of time
The company says that a model Y refresh contributed to the lackluster sales volume, given that many buyers held off on purchases awaiting the new model. However, sales also slipped due to higher-than-usual sales incentives designed to move inventory and lower average sales prices.
Tesla's gross margin dropped 1.04% to 16.3% while its operating margin fell 3.43% to 2.1%.
As a result, Tesla's bottom line shrank. Earnings per share of 27 cents fell 40% year over year and missed estimates by 15 cents.
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During Tesla's earnings conference call, Elon Musk acknowledged Tesla's struggles.
"There's been some blowback for the time that I've been spending in government with the Department of Government Efficiency or DOGE," said Musk. "Starting probably next month, May, my time allocation to DOGE will drop significantly."
Musk said that DOGE's work is important, and he plans to "spend a day or two per week on government matters for as long as the President would like me to." Still, that would represent a much smaller amount of time away from Tesla on government matters, something that Tesla's investors might appreciate.
"This was an off ramp for Musk out of the Trump White House in our view as the global brand damage, political firestorm, and perfect storm chaos over the past few months will now end this volatile political chapter for Musk and we expect minimal, if any time focused on DOGE going forward," said Wedbush analyst, and long-time Tesla bull, Dan Ives.
Tesla shares rallied 7% after the closing bell on April 22 and opened 4% higher on April 23.
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This story was originally published April 23, 2025 at 10:13 AM.
