In a truly excruciating first-quarter earnings report, electric vehicle titan Tesla announced that its $409 million net income was down a staggering 71% year-over-year and its 2% net profit margin was down 68%. Deliveries of the brand’s flagship Model 3 and Model Y were down 12% from the previous quarter, and deliveries of the novel Cybertruck plummeted by 24%.
Yet, investors rejoiced. Tesla stock, which has been otherwise brutalized by the year’s stock market slide and the Trump administration’s trade war, rose nearly 20% over the week. Tesla’s stock price, which was down 41% from year-to-date by the closing bell right before the automaker released its Q1 earnings report, has since recovered to -27% YTD.
While much of the media assumed investor optimism was a result of Elon Musk‘s confirmation that he would dramatically scale back his work in Washington at the Department of Government Efficiency and return to his full-time work at Tesla, it’s what Tesla is already doing that should justify market confidence in the company.
Musk’s most radical rethinking of the consumer’s relationship with the city and the car has rightly received plaudits. Tesla is scheduled to unveil its fleet of fully autonomous robotaxis in Austin this June, with the goal of deploying robotaxis across the country by the second half of 2026.
“The reality is that in the future, most people are not going to buy cars,” Musk said on Tuesday’s earnings call.
But more remarkable is the least visionary aspect of Tesla’s DNA: the supply chain.
Despite Tesla and Musk’s insistence on doing business with Beijing, both have critically onshored all aspects of the company’s supply chain. With 85% of its lineup USMCA compliant and, thus, not subject to any of President Donald Trump’s tariff threats, the brand is properly Trump-proofed. And with its domestic investment in battery production, Tesla is future-proofed against an inevitable decoupling from Chinese markets and its disproportionate control of rare earth minerals.
“Our lithium refining and cathode production plants are on track to start production in 2025, onshoring production of critical battery materials,” the company announced, which is no small feat considering that the United States made just 5% of the world’s lithium-ion batteries last year compared to the 84% produced by China.
General Motors has bragged that it now produces more EV battery cells than Tesla, and it, like Tesla, has indeed invested in lithium extraction and mining. However, rather than focus on sheer volume at one slice of production, Tesla is trying to vertically integrate the entire process, refining raw lithium rather than delegating the lithium to outside refineries.
MUSK’S WORK WITH DOGE TO DROP SIGNIFICANTLY IN MAY
Tesla’s billion-dollar lithium refining plan in Corpus Christi is the only one of its scope in the country, and the company has revolutionized the process to make it less harmful for the environment. Instead of using strong acids, Tesla’s refinery produces sand and limestone as byproducts, two materials that can be repurposed in production. And whereas other EV batteries still rely on rare earth minerals predominantly found in China, Tesla eliminated the use of some extraneous minerals.
Let’s say Musk’s more ambitious projects fail to liberate Americans from reliance on car ownership or passengers from the need for a human driver. Tesla is still refining the lithium that most electronics require to operate. Yes, Tesla is a car company, a robotics company, and an AI company. However, its most valuable monopoly may be that it can liberate the entire electronic power of the country from the Chinese stranglehold on lithium production and refining.