Tesla has reported a 20% decline in first quarter revenues (Q1) 2025, that ended on 31 March. Total automotive revenues were posted at $13.97bn compared to $17.38bn in the same period a year ago.

The US-based automotive company attributed the decline to the necessary upgrades at its four vehicle factories, which are being retooled to manufacture a refreshed version of the Model Y SUV.

The switchover of production lines for the New Model Y led to many weeks of lost production.

“During the switchover, we also prepared our factories for the launch of new models later this year. Given economic uncertainty resulting from changing trade policy, more affordable options are as critical as ever,” Tesla said in a statement.

Furthermore, the company cited lower average selling prices and increased sales incentives as factors that weighed on both revenue and profit.

Net income attributable to common stockholders (GAAP) decreased sharply by 71% to $409m, down from $1.39m, while non-GAAP net income was $934m, a 39% decline from $1.53bn.

Overall, Tesla’s total revenues fell 9% to $19.33bn in the first quarter of 2025 from $21.30bn in the prior-year quarter.

Total gross profit declined 15% year-over-year to $3.15m.

Net cash provided by operating activities increased by 791%, jumping from $242m in Q1 2024 to $2.15bn in Q1 2025.

Adjusted EBITDA stood at $2.81bn in Q1 2025, a 17% decrease from $3.38bn in the previous year’s corresponding quarter.

Operating expenses increased 9% to $2.75bn. Income from operations plunged by 66% to $1.17bn.

The company’s energy generation and storage revenue saw 67% growth to $2.73bn in Q1 2025 from $1.63bn in Q1 2024, while services and other revenue grew 15% to $2.64bn.

In a press statement, Tesla said: “It is difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains, our cost structure and demand for durable goods and related services.

“While we are making prudent investments that will set up both our vehicle and energy businesses for growth, the rate of growth this year will depend on a variety of factors, including the rate of acceleration of our autonomy efforts, production ramp at our factories and the broader macroeconomic environment. We will revisit our 2025 guidance in our Q2 update.”

Tesla is planning to commence production of new vehicles, including more affordable models, in the first half of 2025.

The company’s global sales fell by 13% year-on-year to 336,681 units in the first quarter of 2025, including a 9% drop in US sales to 128,100 units.

Recently, Tesla launched sales operations in Saudi Arabia, opening outlets in the cities of Riyadh, Jeddah and Dammam.