number go up 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. Jonathan M. Gitlin – Apr 23, 2025 8:47 am | 43 Tesla stores across the US continue to be the site of anti-Elon Musk protests. Credit: hoto by Joseph Prezioso / AFP via Getty Images Tesla stores across the US continue to be the site of anti-Elon Musk protests. Credit: hoto by Joseph Prezioso / AFP via Getty Images Story text Size Small Standard Large Width * Standard Wide Links Standard Orange * Subscribers only   Learn more 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to the impact of CEO Elon Musk's central role in the Trump administration, a global trade war, and an increasingly outdated and tiny product lineup.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. Still making money Despite all this bad news, the bottom line remains in the black. Ironically, given Musk's role in tearing up environmental protections, it's regulatory credits that have kept the company profitable. Last year, Tesla increased the amount of credits it pulled in by 54 percent to more than $2.7 billion. That trend may accelerate for 2025 as new rules in the European Union incentivize other automakers like Stellantis to pay Tesla to count its electric vehicles as part of their own pool for emissions. But for this quarter, you can thank the changing headwinds here at home. This "was driven by demand for credits in North America as other automobile manufacturers have scaled back on their battery electric vehicle plans," Tesla wrote in its 10-Q. For Q1 2025, Tesla took in $595 million in regulatory credits. Net income amounted to just $409 million. None of this should be cause for concern, unlike the many times in the past that Tesla almost went out of business, Musk told investors on a call last night. "It's been so many times. This is not one of those times. We're not on the ragged edge of death, not even close," he said. I’m coming back! The good news—if you're a Tesla investor, at least—is that Musk says he will be spending more time at the electric car company in the coming months. He was hired by President Trump as a "special government employee," a loophole that allows someone to be appointed to a senior government position without any of the congressional scrutiny that would normally accompany such a significant job. The proviso is that such positions can legally only be for 130 days, and Musk should reach that total in the next few weeks. The flip side is that his secretive involvement with the DOGE wrecking ball looks set to continue. "I'll have to continue doing it for, I think, probably the remainder of the President's term, just to make sure that the waste and fraud that we stop does not come roaring back, which will do if it has the chance," Musk told investors last night. Earlier this month the New York Times reported that Musk said his DOGE group would now generate just 15 percent of the vast savings he originally claimed—even this smaller amount was disputed by the Times. Musk says he expects to still devote 20 to 40 percent of his working time to the government, meaning Tesla must still fight for his attention together with SpaceX and other, lesser ventures. Autonomous, real soon now Tesla remains "absolutely hardcore about safety," Musk said, despite the Cybertruck being more likely than the infamous Ford Pinto to burst into flames. "We go to great lengths to make the safest car in the world and have the lowest accidents per mile in. So—and look, fewest lives lost," Musk said on last night's call. In 2024, an analysis of the National Highway Traffic Safety Administration's vehicle fatality rate data found that actually Tesla was in fact the deadliest brand of car currently on sale in the US. Musk and the other Tesla executives on the call continued to tout the importance of artificial intelligence and autonomous driving to the company's future. Musk described a "convoy of Teslas" driving in circles around its base in Austin, Texas, to "figure out long-tail things," Musk said. Autonomous or even partially automated driving systems never make it into the list of "must-haves" for American car buyers, but Tesla is pinning its hopes on selling such systems here and abroad. In China, Musk described bold user behavior. "They have a lot of fun with the cars. I saw one guy take a Tesla on—autonomous on a narrow road across like a mountain. And I'm like, very brave person. And the Tesla's driving along on a road with no barriers where he makes a mistake, he's going to plunge to his doom," he said. Tesla charges almost $9,000 for its partially automated driving system in China, which can now no longer be called "FSD" or "Full Self Driving" in the country. Earlier this week, the Chinese government banned misleading terms like "smart" or "autonomous" in vehicle advertising. And Tesla's domestic rivals like Zeekr and BYD—which now outsell the American company—are giving away their own partially automated driving systems for free. Number go up It all may sound like a great big bucket of bad news for the car company, but the stock market has a different take. "If this is the worst it gets for Tesla, then certainly there must be some upside for the stock once tailwinds, such as the highly-awaited cheaper model and the Robotaxi, finally hit the market later this year," wrote Thomas Monteiro, senior analyst at investing.com. Predictably, Tesla's stock price has risen steadily in premarket trading immediately after announcing its results. Jonathan M. Gitlin Automotive Editor Jonathan M. Gitlin Automotive Editor Jonathan is the Automotive Editor at Ars Technica. He has a BSc and PhD in Pharmacology. In 2014 he decided to indulge his lifelong passion for the car by leaving the National Human Genome Research Institute and launching Ars Technica's automotive coverage. He lives in Washington, DC. 43 Comments