Tesla (TSLA -5.40%) investors have a decision to make. Vehicle sales dropped last year for the first time since the electric vehicle (EV) specialist began mass production. Notably, 2024 net income plunged by 53% versus 2023.

Those two things were related, of course. Sales dropped as demand for EVs slowed and competition grew. That led to a price war to attract customers, which slashed profit margins and earnings.

After Thursday's decline, the stock has now dropped by about 30% so far in 2025. Investors need to decide if that decline provides a buying opportunity, or if the downward trend in sales and earnings could continue. There's one number to keep an eye out for when the company reports its first-quarter financial results on Tuesday, April 22.

Tesla EV sales plunge

Tesla just released one highly anticipated number. Estimates for first-quarter deliveries had been dropping as competition has ramped up, and controversy over CEO Elon Musk's role in the Trump administration has carried over to protests against the Tesla brand.

EV shipments were even worse than feared in the first quarter. Deliveries declined 13% year over year, while production was lower by 16.3%. That leads to where investors should focus when Tesla does report its full financial results later this month.

Looking back a few months, Tesla's fourth-quarter deliveries increased by 2% year over year, but automotive revenue declined by 8% and income from operations plunged 23%. Looked at another way, operating margin declined by 204 basis points, or about 2 full percentage points.

TSLA Operating Margin (TTM) data by YCharts

Operating income is the best way to judge Tesla's core business. Tesla's receives a meaningful amount of revenue from regulatory credits. They are not part of operating margin, though, and shouldn't be considered when evaluating the underlying business.

Tesla's operating margin has been on the decline in recent years. Investors now know that EV sales plunged in the first quarter. If operating margin also continued to decline, the stock may have more room on the downside. Watch for that number when the company reports in a few weeks.