The first quarter earnings season for Technology giants is kicking off, and global investors will once again focus on the earnings performance of the Magnificent 7 in the USA stock market.$Tesla (TSLA.US)$The first to report will be Tesla, which will release its Q1 2025 performance after the market closes on April 22nd (Tuesday) Eastern Time. According to market consensus, Tesla is expected to achieve revenue of 21.54 billion USD in Q1, an increase of 1.12% year-on-year; the EPS is expected to be 0.37 USD, up 8.24% year-on-year.

At the end of last year, as the USA elections concluded, Tesla's stock price soared, reaching a historic high of $488.54 in December. However, it quickly reversed and has faced challenges this year, with Tesla's stock price dropping over 40% year-to-date, almost halving compared to its historic peak.

Looking ahead to this performance, investors will focus on revenue from the Business, the status of the Energy business, AI-related Business, and the impact of Trump's tariff policies. Additionally, Tesla's upcoming announcement of its annual auto delivery volume will also be a key factor for market reactions.

• Revenue from the Auto Business.

While sales of leading domestic Electric Vehicle manufacturers continue to improve, Tesla's sales have plummeted.

At the beginning of this month, Tesla announced its vehicle delivery volume for the first quarter of this year, globally delivering 0.3367 million units, a year-on-year decrease of 13%. This marks the first time Tesla has seen a double-digit decline, recording the worst quarterly performance since the fourth quarter of 2022, a figure far below the market expectation of 0.39 million units.

In the first quarter of 2025, the combined delivery volume of Tesla Model 3 and Model Y was 323,800 units, a year-on-year decrease of 12.4%. The data also indicates that the production volume in Q1 was 362,615 units, a year-on-year decrease of 16%.

Tesla did not mention the reasons for the sharp decline in delivery volume, but media analysis suggests that the interruptions in production due to the Model Y facelift, increased discount pressures, and incentive measures squeezing profit margins are expected to lower the gross margin of auto sales to around 15.8%, a significant drop compared to last year and far below the long-term target of 25%. In addition, the public relations turmoil caused by Musk's relationship with the Trump administration and Trump's announcement of reciprocal tariff policies have also severely impacted market confidence.

Meanwhile, according to the latest data released by the California New Car Dealers Association (CNCDA), Tesla's registration volume in California in the first quarter decreased by 15.1% compared to the same period last year, marking a continuous decline for six consecutive quarters, with its market share in the state's electric vehicle market dropping from 55.5% to 43.9% compared to the same period last year.

California is the largest electric vehicle market in the USA. As anti-Musk sentiment continues to rise, Tesla is gradually losing its dominant position in the state's electric vehicle market. According to media calculations, California accounts for nearly one-third of Tesla's sales in the USA.

• Energy Storage Business

Against the backdrop of declining performance in the Auto Industry, Tesla's energy business may become a highlight of this Earnings Report, with the market generally expecting significant revenue growth for this segment.

In the first quarter of this year, Tesla's global energy storage system added a new installed capacity of 10.4 GWh, a year-on-year increase of 156.6%, reaching a historical new high, with energy business revenue increasing by over 200% year-on-year. This was mainly due to the capacity expansion of the Megapack large energy storage system and a surge in market demand, which provided a new growth point even as the electric vehicle business declined sharply.

In addition, Tesla's energy storage super factory located in Shanghai Lingang, which has an annual production capacity of 40 GWh of Megapack, has already entered mass production in the first quarter of this year. Tesla has stated that the potential of the Chinese energy storage market is huge, and the Shanghai energy storage super factory will become a key growth engine for Tesla's global energy business.

The energy storage business is one of the fastest-growing sectors for Tesla, with CEO Musk predicting a growth of over 50% by 2025, a goal that has already been achieved in the first quarter.

• AI-Related Business

Musk seems to have lost interest in producing traditional electric vehicles, facing a significant decline in sales. Nevertheless, he still chooses to bet heavily on AI.

It has been reported that Musk is working to transform Tesla into an AI technology company. To this end, he has not only personally halted the highly anticipated budget electric vehicle project Model 2 but has also bet the company's future on AI-driven products such as self-driving taxis Robotaxi and humanoid robots.

Elon Musk has revealed that Tesla will spend 10 billion dollars on AI-related fields throughout 2024. Whether it's the humanoid robot Optimus showcased by Tesla at last year's Tech Day, the fully autonomous driving (FSD) solution about to land domestically, or the self-driving taxi Robotaxi, the core competitiveness essentially lies in AI.

In addition, Musk recently dropped a "technology bomb" on social media — announcing that Tesla is about to launch the world's first pure vision AI fully autonomous driving (FSD) solution, which can achieve L4/L5 level autonomy relying solely on cameras, self-developed AI chips, and algorithms, completely abandoning traditional Lidar and other sensors, relying only on cameras, Tesla AI Chip, and AI Software.

Regarding Tesla's AI business, Morgan Stanley has stated that Tesla is regarded as one of the absolute technology leaders in the field of "Humanoid 100" robots, with strong long-term growth potential. The so-called "embodied AI" refers to the cutting-edge technology field represented by "AI humanoid robots".

• Impact of Trump's Tariff Policy.

When discussing the U.S. government's additional tariffs on imported autos, Musk stated on social media that auto tariffs have a significant impact on Tesla.

According to Reuters, the tariffs imposed by the U.S. government on China have disrupted Tesla's production plans in the USA. It was reported that a source revealed that Tesla's plans to ship Cybercab self-driving taxis and Semi electric truck components from China to the USA were halted.

The source stated that when Trump imposed a 34% tariff on Chinese goods, Tesla was prepared to bear the extra costs, but when tariffs exceeded that level, Tesla could not afford it, leading to a postponement of shipping plans. Reports indicated that this reflects how Trump's tariffs aimed at promoting domestic manufacturing in the U.S. have hurt his political ally Musk.

Due to concerns that Trump's "tariff stick" will weaken the entire auto industry, several analysts on Wall Street have lowered Tesla's Target Price.

UBS Group has significantly lowered Tesla's Target Price to $190 and expects the electric vehicle manufacturer’s car deliveries to decline by 11% by 2025.

According to the Research Reports released by UBS Group's Analyst team, the tariffs imposed by the Trump administration on the Global auto Industry could increase the cost of each car by an average of $5,000, and reduce domestic demand in the USA by 9%. They considered the currently high auto tariffs of up to 25% and the 25% import tax on Auto Parts that will take effect at the beginning of next month. UBS Group stated that these trade policies could usher in a 'new era' for the USA auto industry.

Mizuho's Analyst stated that the tariffs will raise Tesla's prices, eroding already weak demand, and lowered its Target Price to $375.

The Mizuho Analyst wrote in the report, 'Although the currently lower expectations for 2025 have reached a broader consensus, we believe that Tesla's overall earnings trajectory is still too high, and its stock price may be volatile and inclined downward.' Mizuho estimates that the auto tariffs will push up prices, discouraging consumers, and could lead to a 3.5% reduction in Tesla's revenue in the USA by 2025.

How did the stock price perform on each Earnings Reports day?

Currently, Tesla's implied volatility is ±10.96%, indicating that the Options market bets on a post-earnings single-day price fluctuation of 10.96%. In comparison, Tesla's average price change post-earnings in the previous four quarters was ±12.3%, showing that the current Options value of the stock is undervalued.

From the perspective of Options volatility skew, market sentiment is bearish on Tesla's future trend.

mooers,

Tesla is about to face a major performance test.

What do you think the stock price will do before and after this earnings report?

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Editor/rice