Tesla Executives Say Tariffs, Economic Jitters Could Have ‘Meaningful Impact’ on Demand
Tesla Inc. leaders took a step back from their previous projections that the company’s auto business will grow this year, saying that their ability to ramp production and their work on autonomy along with “rapidly evolving trade policy” means they will revisit their 2025 forecast in three months.
The change in outlook from Tesla comes after the company’s first-quarter earnings report April 22, which showed that automotive revenues early this year totaled nearly $14 billion, down 20% from $17.4 billion in early 2024. Unit sales fell to about 337,000 early this year from 387,000 in Q1 of 2024 and nearly 496,000 in the fourth quarter.
The company’s average revenue per sale, meanwhile, fell nearly 8% year over year to roughly $41,500 but that figure was up nearly 4% from Q4.
On a conference call after the earnings report, executives pointed out that the quarter included the impact of changing over production of Tesla’s top-selling Model Y to a new version. Musk also tried to place Tesla’s numbers in context by saying the company can’t avoid the fact that consumers have grown more skittish given the broader economic picture.
“Absent macro issues, we don’t see any reduction in demand,” he said after earlier saying that, while Tesla has faced serious crises in the past, the current environment consists of “bumps and potholes in the road immediately ahead of us.”
Nevertheless, Tesla’s earnings report pointed out that the broad uncertainty from tariffs recently instituted by President Donald Trump and U.S trading partners in response is hurting Tesla’s supply chain and cost structure.
“This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near term,” executives wrote.
The Tesla team also said the tariffs will more severely affect Tesla’s energy generation and storage business but that they are “taking actions to stabilize the business in the medium to long-term and focus on maintaining its health.” In the first quarter, the energy division’s revenues totaled $2.7 billion, down from $3.1 billion late last year and $1.6 billion in Q1 of 2024.
In all, Austin-based Tesla produced net income of $420 million in the first quarter on total revenues of $19.3 billion. In the first three months of last year, those numbers were $1.4 billion and $21.3 billion, respectively.
Also on the April 22 call:
- Musk said he plans to take a big step back next month from his work leading the Department of Government Efficiency so that he’ll be spending “a day or two a week” there. He added that he expects to continue in some sort of DOGE role through the end of President Trump’s term, which is a far longer commitment that he had previously promised.
- Musk reiterated that Tesla plans to begin offering its robotaxi service in Austin in June.
Shares of Tesla (Ticker: TSLA) rose more than 4% to about $249 in after-hours trading April 22, adding to a similar gain they booked during the regular session. Over the past six months, they’re up nearly 10% and Tesla’s market capitalization now stands at $812 billion.
