Tesla shares plunged sharply on Monday, falling over 7% as investors braced for the electric vehicle manufacturer’s first-quarter earnings report due on Tuesday. The stock closed at approximately $227.50, lingering just above its yearly low, and marking a staggering 44% decline since the start of 2025. This marks one of Tesla’s most volatile periods since 2022, with the share price experiencing multiple steep drops throughout the year.
Investor concerns have intensified due to CEO Elon Musk’s high-profile political involvement, particularly his association with the Trump administration. Analysts argue that Musk’s distractions outside Tesla have diverted focus from the company’s core operations, contributing to what many describe as “brand erosion.” This political entanglement has provoked backlash, especially across Europe and parts of the United States, where Tesla has faced protests, boycotts, and even criminal acts targeting its vehicles and facilities.
Ahead of the earnings call, Tesla’s investor forum was flooded with questions about the company’s self-driving technology, the development of its Optimus humanoid robot, and Musk’s political activities. One investor notably asked, “What steps has the board of directors taken to mitigate the brand damage caused by Elon’s political activities?”
Tesla recently announced that it delivered 336,681 vehicles in the first quarter, representing a 13% drop compared to the same period last year and falling short of analyst expectations, which had hovered near 380,000 units. This disappointing delivery figure has heightened concerns about Tesla’s growth prospects, especially as it contends with mounting competition in China and the ongoing impact of U.S. tariffs on imports.
Analysts warn that rising “nationalistic” consumer preferences in China may shift demand towards domestic brands, forcing Tesla to export more vehicles and potentially apply downward pressure on pricing, thus squeezing profit margins.
Financial forecasts for the quarter estimate revenues of around $21.24 billion, slightly below last year’s figures, with earnings per share expected to be approximately 40 cents. Investors will be closely watching Tesla’s commentary on the effect of tariffs and how these might influence profitability during 2025.
Analysts remain cautious. Barclays recently downgraded Tesla’s rating to “Equal Weight” and lowered its price target from $325 to $275, citing weak fundamentals and a confusing start to the year. While Barclays acknowledges the possibility of a positive market reaction if Musk refocuses on Tesla and provides an update on Full Self-Driving (FSD) technology, the firm remains sceptical about volume growth prospects for 2025.
Other major financial institutions, including Wells Fargo and Deutsche Bank, have also trimmed their delivery and earnings estimates, citing signs of weakening demand across Tesla’s key markets in the U.S., Europe, and China. Wells Fargo has pointed to promotional campaigns, such as 0% APR financing for the Model Y in China, as indicators of softening sales and forecasts a 7% decline in deliveries for the year. Deutsche Bank expects profit margins to fall to between 10% and 11%, down from 13.6% last quarter.
From a technical standpoint, Tesla’s share price remains under pressure, with resistance levels around $289 and potential support zones between $156 and $162. This suggests the stock may enter a prolonged consolidation phase before any sustained recovery takes hold. Analysts advise cautious trading strategies, awaiting confirmation of either a breakout or a test of lower support levels in the near future.
The forthcoming earnings call is widely regarded as a critical juncture that could either stabilise investor confidence or worsen concerns about the company’s future direction.