Key concerns ahead of quarterly earnings report
Upcoming earnings report of Tesla on Tuesday has investors eager for answers from CEO Elon Musk. The focus is firmly on two major concerns: the launch of a long-promised affordable vehicle and the progress of its robotaxi project.
Wall Street is banking on a low-cost Tesla model to reverse the company’s declining sales. Increased competition, particularly from Chinese EV makers, and backlash against Musk’s political affiliations have dented Tesla’s momentum.
An exclusive report from Reuters last week revealed that Tesla’s affordable car may be a stripped-down version of the Model Y, built in the United States. However, production has already been delayed by several months.
“The low-cost Tesla might be the one thing that could turn momentum around,” said Will Rhind, CEO of ETF issuer GraniteShares. “If it ends up being a bare-bones Model Y, the market could be disappointed. Elon really needs to hit the deadline – and the product itself.”
Slumping sales and margin pressures
Tesla is in urgent need of a success. Analysts estimate that the company’s automotive gross margin hit a record low in the first quarter. With sales falling, Tesla has relied on price cuts and incentives, further squeezing profit margins.
To reduce development costs, Tesla plans to use existing production lines for the new budget model. However, the company has released few details beyond that approach.
Meanwhile, competition in China and Europe has surged. In response, Musk shifted focus last year to autonomous vehicles and artificial intelligence. He pledged to launch robotaxi services in Texas by June and later in California.
Yet Musk has repeatedly missed previous self-driving deadlines over nearly a decade. Safety concerns and legal risks remain major barriers, especially as regulatory approvals for the service are still pending.
Tesla Robotaxi and Cybercab setbacks
Tesla’s Cybercab, the concept at the heart of its robotaxi vision, may face delays. Reuters reported that Tesla paused imports of key parts from China due to new US tariffs under President Donald Trump’s administration. These tariffs now stand at 145%.
Adding to concerns, questions persist over how much time Musk is dedicating to Tesla amid his involvement in Trump’s government. His political activities have sparked public backlash, leading to protests at Tesla showrooms and a decline in brand perception.
California, Tesla’s largest US market, has seen a sharp drop in sales. Tesla’s stock has plunged 40% in 2025, wiping out over $500 billion in market value.
“If Musk can refocus on restoring Tesla’s brand, the damage can still be limited,” said Dennis Dick, chief strategist at Stock Trader Network. “He needs to cut back on political commentary and put more energy into FSD, robotaxis, and Optimus.”
Revenue steady, but profitability in doubt for Tesla
Despite weak deliveries, Tesla’s first-quarter revenue is expected to remain steady at $21.35 billion, according to LSEG estimates. This is largely due to increased income from regulatory credits and energy systems.
However, automotive gross margin, excluding credits, is forecast to fall to 11.83% from 13.6% in the previous quarter, based on Visible Alpha data.
Deutsche Bank’s Edison Yu noted that Tesla may continue prioritising delivery volumes over profitability. Offers such as free charging or access to driver-assist features could put additional strain on margins.
The company has also begun discounting Cybertrucks in stock as demand fades. A full recall of the model in March, due to an external panel defect, has raised further safety concerns.
with inputs from Reuters
