Is Tesla's Q1 Earnings Report a Turning Point? Musk to Resign from DOGE as Tariff War Eases

TradingKey - Despite electric vehicle leader Tesla (TSLA.US) posting disappointing results for the first quarter of 2025, with both revenue and profits declining, the two major "headaches" that have been worrying the market seem to be on the verge of being resolved: CEO Elon Musk is set to step down from his political role at the Department of Government Efficiency (DOGE), and the Trump tariff war appears to be de-escalating.

On Tuesday, April 22, after the market closed, Tesla released its Q1 2025 earnings report. Tesla’s revenue came in at 19.34 billion, far below market expectations of 21.11 billion, marking a 9% year-over-year decline when analysts had anticipated slight growth. Earnings per share (EPS) were 0.27, falling short of the expected 0.39.

Tesla explained that the drop in Q1 revenue was due to reduced vehicle deliveries caused by updates to production lines at its four automotive factories (to produce the Model Y). Price cuts and sales incentives also weighed on revenue.

The company stated that rapidly changing trade policies have adversely impacted Tesla and its peers' global supply chains and cost structures, leading to rising uncertainties in both the automotive and energy markets. Coupled with shifting political sentiment, these factors could significantly impact demand for our products in the short term.

However, the two biggest concerns that have weighed on Tesla's stock price and growth outlook this year saw significant relief on the day of the Q1 earnings release.

Elon Musk announced on Tuesday that he would significantly reduce his work at DOGE starting in May, allowing him to devote more time to Tesla.

Wedbush analyst Dan Ives had previously suggested that reversing the brand damage Tesla suffered this year hinges on when Musk leaves his White House role. Zacks analysts noted that Musk’s return to his full-time role as Tesla CEO is undoubtedly positive news.

Meanwhile, the U.S.-China trade tensions, which have cast a shadow over Tesla's vehicle sales growth, are showing signs of easing. On Tuesday, President Trump acknowledged that the current tariffs on Chinese goods are too high and will be significantly reduced in the future. U.S. Treasury Secretary Scott Bessent also indicated that high tariffs are unsustainable, signaling a de-escalation of the tariff war between the world’s two largest economies.

Buoyed by the easing trade tensions, Tesla's stock rose 4.60% on Tuesday to close at $237.97. Musk’s positive remarks during the post-market session pushed Tesla’s shares up another 5% in after-hours trading.