Tesla's identity crisis continues

The world of finance may be abuzz about SpaceX filing for an IPO, but Elon Musk’s other golden child is hitting a speed bump.

Today, Tesla reported it delivered 350,023 EVs in the first quarter of 2025—a steep miss compared to projections of about 381,000 units. This marks the second consecutive quarter that the company has missed sales projections, and its second-worst quarter of this metric since 2022.

On top of that, Q1 energy storage deployments (a key revenue pillar for Tesla’s energy storage business) came in at 8.8 gigawatt hours, down from the 14.2 gigawatt hours deployed in the prior quarter, and roughly 39% lower than analyst estimates.

The EV maker did deliver 8% more cars than it did in the same quarter last year, although that was a notably rough quarter, since it was at the height of Musk’s political antics.

Tesla sank 5.42% on the news. The stock has fallen 19.82% this year amid disappointing deliveries, intense competition from China, and persistent fears that Musk is distracted from his role as CEO.

Swapping EVs for AI

While shareholders were dismayed by Tesla’s misses today, analysts weren’t particularly surprised—after all, Musk appears more focused on robotaxis, humanoid robots, and turning Tesla into an AI giant than dominating the EV market.

“While the delivery numbers were quite underwhelming, this was not a shock given the current EV backdrop across geographies while the company shifts gears to focus more on its AI strategy,” Wedbush analyst and Tesla bull Dan Ives wrote in a note today.

Although die-hard Musk fans are on board for this transition from electric vehicles to cybercabs, Optimus robots, and AI, Tesla’s EV business is still its primary cash cow—at least for now. Luckily for shareholders, the EV market at large has actually gotten a boost from the Iran war, of all places. With the flow of oil disrupted and gas prices climbing, EVs that can save drivers cash at the pump suddenly look preferable.

That might present an opportunity for Tesla to recover some lost ground in the EV market. But it’s Musk’s big ambitions that ultimately hold the key to Tesla’s future.

“We continue to believe the most important chapter in Tesla’s growth story is now beginning with the AI era here,” Ives said.—LB