Tesla’s death is “not close” says Musk, as operating margin drops to 2%

As Elon Musk helps undo regulations, regulatory credits keep Tesla profitable.

Apr 23, 2025 - 14:08

Tesla’s death is “not close” says Musk, as operating margin drops to 2%

Tesla managed to hold onto profitability in the first quarter of 2025. 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to the impact of CEO Elon Musk's central role in the Trump administration, a global trade war, and an increasingly outdated and tiny product lineup.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 nine 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. Now the third successive fall in a row, the company will start to lose money on every car it sells should this trend continue.

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