Tesla’s stock rose by 3% in early trading after CEO Elon Musk announced that he would be dedicating more time to Tesla and less to his other venture, DOGE (Department of Government Efficiency). This news gave a boost to the stock, even though Tesla’s latest earnings didn’t meet Wall Street’s expectations.

Musk Shifts Focus:

Starting in May, Musk revealed that he would focus more on Tesla and cut back on his time with DOGE. While he’ll still spend a couple of days a week on DOGE, his primary focus will now be on guiding Tesla into the future.

Financial Results Missed the Mark:

Tesla’s Q1 revenue came in at $19.34 billion, falling short of the $21.43 billion analysts had anticipated. The company posted earnings of $0.27 per share, which was well below the expected $0.44. Profits for the quarter were down 40% compared to last year.

Plans for More Affordable EVs and Robotaxis:

Tesla is moving ahead with plans to introduce more affordable electric vehicles by mid-2025. The company is also sticking to its goal of launching Robotaxi production by 2026, a topic that had raised concerns among investors.

Global Trade Issues and Tariffs Impacting Sales:

Tesla said its sales were affected by uncertainty in global trade and the changing political environment. The company is concerned that shifting trade policies and tariffs are hurting its supply chain and cost structure, which could ultimately affect vehicle demand.

Musk’s Thoughts on Tariffs:

Musk mentioned that he told President Trump that lowering tariffs would benefit the country.

“While we would have preferred a full re-engagement with Tesla (as opposed to still sharing time with political efforts), we nevertheless believe the narrative should benefit from a re-engaged Elon on Tesla – simply, with Tesla more heavily focused on AV/AI, Elon is more important than ever to keep this narrative moving forward … Elon is Tesla,”

Barclays analyst Dan Levy wrote in a note to clients after the earnings call. However, he acknowledged that tariff decisions are ultimately in the hands of the president, and the ongoing uncertainty could negatively impact Tesla’s business.

Gross Margin and Performance:

Tesla’s gross margin for the quarter came in at 16.3%, slightly better than the expected 16.1%. Excluding regulatory credits, the automotive gross margin was 12.5%. The company is still on track to release a lower-priced EV in 2025, which is expected to drive a 50% growth rate compared to 2023. However, there have been reports that the launch of the affordable EV has been delayed until later in the year.

Sales and Demand Concerns:

Tesla reported 336,681 deliveries for Q1, which is the lowest number since Q2 2022. Meanwhile, competitors like BYD saw strong sales as customers rushed to buy before the tariffs were imposed on April 2. The new tariffs are putting additional pressure on Tesla and contributing to the decline in sales in key markets.

Political Issues and Brand Impact:

Musk’s political ties have also affected Tesla’s reputation, particularly his connections with President Trump and right-wing figures in Europe. Protests at Tesla showrooms have been growing, both in the U.S. and internationally, and some reports have even mentioned vandalism at Tesla locations.

Looking Ahead:

Musk confirmed that Tesla will start Robotaxi testing in Austin by June. He also pointed out that Tesla’s vehicles are much cheaper compared to competitors like Waymo, which use expensive sensor systems in their cars.

Challenges and Opportunities for Tesla:

Tesla is dealing with various challenges, including increased competition, issues with demand, and the effects of global trade policies and political controversies. However, Musk’s renewed focus on the company, coupled with Tesla’s plans for innovation, such as affordable EVs and Robotaxi production, may help the company weather these challenges and continue growing.