Tesla anticipates reporting a drop in profit margins and earnings for the first quarter due to lower-than-expected deliveries. The company delivered approximately 337,000 units, slightly missing estimates, and experienced a decline in operating leverage.

Wells Fargo predicts Tesla’s Q1 earnings per share to be $0.34, compared to the consensus of $0.42, with auto gross margins (excluding regulatory credits) dropping to 12.8% from 13.6% in the previous quarter. The firm also reduced its full-year 2025 earnings per share estimate by 16%, due to reduced demand for the refreshed Model Y and an anticipated 11% decrease in deliveries.

Attention is on potential updates on Tesla’s affordable Model 2, though no timeline has been set. Interest in the Cybertruck seems to be decreasing, and interest is shifting towards projects like the Cybercab and the humanoid robot Optimus.

Wall Street predictions for 2025 have declined, with expectations of a second year of decreasing sales. Concerns focus on Tesla’s brand image, impacted by Elon Musk’s political activities and economic uncertainty from past tariffs.

Tesla’s Q1 2025 financial results will be released on April 22, 2025, after market close. A webcast of the earnings call can be accessed on Tesla’s Investor Relations site, with a replay available two hours post-event.

What the initial paragraphs convey is fairly straightforward. Tesla is facing mounting pressure on its profitability as results for the first quarter approach. Delivery numbers came in lower than predicted, and this shortfall is expected to show up directly in their earnings and margins. Essentially, the company isn’t selling as many vehicles as forecast, and this is impacting its ability to scale profitably.

Wells Fargo’s estimates cut deeper than the street expected. They’re seeing margin contraction and have adjusted their projections well into next year. What stands out is the decision to bring down the 2025 earnings estimate by a wide margin. That sort of downgrade signals doubts not just about a single model’s uptake but about the broader buying appetite. The downward revision in Model Y expectations suggests weakening traction at a time when Tesla was likely hoping for recovery or at least some plateauing. The margin figure slipping—down by nearly a full percentage point—is more than a routine fluctuation. It shows real erosion, likely tied to rising fixed costs and diminishing returns from scale as vehicle output levels out or falls.

While the Model 2 continues to be talked about, the company hasn’t pinned down a release date. That creates uncertainty in pricing strategy across the lineup. The Cybertruck, once a headline product, now appears to have lost much of its earlier momentum. Attention is quietly moving to other experimental ideas. The robot concept and self-driving taxi are being floated as potential long-term revenue centres, but neither is near commercial roll-out. These kinds of long-horizon projects do little to ease near-term pressure on margins or cash flow.

Estimates for next year’s performance are falling, so we are now eyeing a second year with shrinking sales volumes at a time when global competition is scaling up and economic signals remain mixed. Musk’s political involvement and past trade tensions haven’t helped public perception—these are weighing on brand equity abroad and at home.

With the Q1 numbers due shortly, volatility around the report is very likely. Guidance and management commentary could prove more market-moving than the headline earnings figure itself. If outlook commentary shifts tone or production targets are realigned, expect positioning capital to adjust aggressively. Option premiums into the event could be higher, especially in shorter tenors. The implied moves may not fully account for uncertainty beyond unit sales—we believe margin commentary and any timeline indication for new products matter more here.

From a positioning view, spreads have widened and the skew has steepened, more so in the downside strikes. That reflects growing caution. There’s room for overreaction, particularly if Elon surprises either positively or negatively on production commitments. Traders will want to stay nimble and avoid directional exposure that assumes full clarity around upcoming product lines.

Watch post-earnings flows. If implied volatility sinks and the stock reacts less than expected, that may suggest overhedging into the print. Alternatively, sharp downside movement could indicate re-pricing of growth assumptions, especially if any model cadence is pushed back further.