Tesla salvages first-quarter profit margins as car sales skid

A battered Tesla topped rock-bottom profitability expectations on Tuesday (Apr 22) and said it was on track to produce an affordable car, offering some hope to investors as sales dropped. It said it would have to reassess its growth forecast in three months.

The electric-vehicle maker said in its first-quarter results that it would revisit its annual outlook in its next earnings report due to "the impacts of shifting global trade policy".

It said its plans to release a cheaper car in the first half of 2025, and launch a robo taxi fleet in Austin, Texas, both remained on track. Tesla has faced

Many investors are calling for Musk to leave his work as US President Donald Trump's adviser and get back to managing Tesla more closely. Tesla showrooms have been vandalised, and sales in California - its largest US market - have fallen sharply.

But its stronger-than-expected margin in the first quarter offers some relief, as its cost of making and selling vehicles dropped over 17 per cent year over year, driven by lower raw material prices and reduced expenses of ramping up Cybertruck production.

Automotive gross margin for the period, excluding regulatory credits, was 12.5 per cent, according to Reuters calculations, compared with expectations of 11.8 per cent, according to 21 analysts polled by Visible Alpha.

But the company said: "Uncertainty in the automotive and energy markets continues to increase as rapidly evolving trade policy adversely impacts the global supply chain and cost structure of Tesla and our peers. This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term."

It added that it was "difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains, our cost structure and demand for durable goods and related services," which would prompt a reevaluation of its annual forecast.

The electric vehicle maker reported revenue of US$19.34 billion for the January-March quarter, compared with estimates of US$21.11 billion, according to data compiled by LSEG.

Tesla reported earlier this month that deliveries in the January-March period slid 13 per cent, as the company lost ground to Chinese rivals, and Musk's political actions as a close adviser to US President Donald Trump have damaged the brand.

The company's stock, which closed at US$237.97 on Tuesday, has nearly halved from its December peak. It was little changed in after-market trading.

The EV maker scrapped plans for a brand-new, low-cost model last year, opting instead to produce cheaper variants using existing platforms and assembly lines. Reuters reported exclusively on Friday that Tesla delayed plans to start production of a more affordable Model Y crossover by at least a few months.

Musk promised driverless ride-hailing services to the public in Texas by June, and in California for later this year. To that end, Tesla has been seeking regulatory approvals, but there are serious concerns about safety and related litigation risks that could come with deploying unproven driverless technology on public streets.

Analysts expect a second straight annual decline in Tesla deliveries in 2025, despite efforts to boost sales through incentives like free charging and Full Self-Driving features.

Tesla also recalled all Cybertrucks delivered since late 2023 and launched a lower-priced $70,000 version of the vehicle. It has been discounting unsold inventory of the electric pickup truck in recent weeks.

Tariff tensions add further uncertainty. Tesla has paused some China-sourced component imports after U.S. tariffs on the Asian country rose to 145%, Reuters reported. China has responded with tariffs of its own, leading Tesla to suspend new Model S and X orders in the country.