Tesla’s Q1 results show the financial cost of Musk’s support for Trump

Tesla managed to hold onto profitability in the first quarter of 2025—but only just. Earlier this month, the automaker reported double-digit declines in both production and delivery numbers thanks to the impact of CEO Elon Musk’s central role in the Trump administration, a global trade war, and an increasingly outdated and tiny product lineup. Yesterday, we saw the true cost of those factors when Tesla published its profit and loss statement for Q1 2025.

Total revenues fell by 9 percent year over year to $19.3 billion in Q1. Selling cars accounts for 72 percent of Tesla’s revenue, but these automotive revenues fell by 20 percent year over year. Strong growth (67 percent) in Tesla’s storage battery and solar division helped the bottom line, as did a modest 15 percent increase in revenue from services, which includes its Supercharger stations, which are now opening to other car brands.

But Tesla’s expenses grew slightly in Q1 2025, and more importantly, its profitability shrank. Income from operations fell by two-thirds to $399 million, and its operating margin—once as high as 20 percent—has fallen to just 2.1 percent. After the third successive fall in a row, the company will start to lose money on every car it sells if this trend continues.

Still making money

Despite all this bad news, the bottom line remains in the black. Ironically, given Musk’s role in tearing up environmental protections, it’s regulatory credits that have kept the company profitable. Last year, Tesla increased the amount of credits it pulled in by 54 percent to more than $2.7 billion. That trend may accelerate for 2025 as new rules in the European Union incentivize other automakers like Stellantis to pay Tesla to count its electric vehicles as part of their own pool for emissions.

But for this quarter, you can thank the changing headwinds here at home. This “was driven by demand for credits in North America as other automobile manufacturers have scaled back on their battery electric vehicle plans,” Tesla wrote in its 10-Q.

For Q1 2025, Tesla took in $595 million in regulatory credits. Net income amounted to just $409 million.

None of this should be cause for concern, unlike the many times in the past that Tesla almost went out of business, Musk told investors on a call last night. “It’s been so many times. This is not one of those times. We’re not on the ragged edge of death, not even close,” he said.

I’m coming back!

The good news—if you’re a Tesla investor, at least—is that Musk says he will be spending more time at the electric car company in the coming months. He was hired by President Trump as a “special government employee,” a loophole that allows someone to be appointed to a senior government position without any of the congressional scrutiny that would normally accompany such a significant job. The proviso is that such positions can legally only last for 130 days, and Musk should reach that total in the next few weeks.

The flip side is that his secretive involvement with the DOGE wrecking ball looks set to continue. “I’ll have to continue doing it for, I think, probably the remainder of the president’s term, just to make sure that the waste and fraud that we stop does not come roaring back, which [it] will do if it has the chance,” Musk told investors last night. Earlier this month, The New York Times reported that Musk said his DOGE group would now generate just 15 percent of the vast savings he originally claimed—and even this smaller amount was disputed by the Times.

Musk says he expects to still devote 20 to 40 percent of his working time to the government, meaning Tesla must still compete for his attention, alongside SpaceX and other, lesser ventures.

Autonomous, real soon now

Tesla remains “absolutely hardcore about safety,” Musk said, despite the Cybertruck being more likely than the infamous Ford Pinto to burst into flames. “We go to great lengths to make the safest car in the world and have the lowest accidents per mile in. So—and look, fewest lives lost,” Musk said on last night’s call. In 2024, an analysis of the National Highway Traffic Safety Administration’s vehicle fatality rate data found that, actually, Tesla was the deadliest brand of car on sale in the US.