In the first quarter of the year, Tesla experienced a 13% drop in sales, highlighting the challenges faced by Elon Musk’s renowned electric vehicle company in attracting consumers. The decrease in sales reflects growing discontent with Musk’s engagement in right-wing politics and his connection with the Trump administration, which has led to protests at Tesla showrooms both in the United States and Europe, where the declines have been particularly acute.
Tesla, headquartered in Austin, Texas, is dealing with an aging lineup, which may have prompted potential buyers to postpone their purchases of the Model Y as they awaited an updated version. Additionally, Tesla is contending with intense competition from other electric vehicle manufacturers, such as China’s BYD, which are offering significantly improved models.
Globally, Tesla delivered 336,681 vehicles in the January to March timeframe, a drop from the 387,000 sales recorded in the same period last year. The reduction in sales occurred despite aggressive discounts, zero financing options, and other incentives, suggesting potential trouble for the upcoming first-quarter earnings report that may not meet investors’ expectations.
Financial expert Dan Ives from Wedbush commented that Wall Street analysts had anticipated a challenging first quarter, but the results were even more disappointing than predicted. He labeled the sales outcome as a “disaster on every metric,” affirming that the brand’s crisis is undeniably negatively impacting Tesla.
Musk, serving as an adviser to Donald Trump, has concentrated efforts on reducing government spending. Last month, as criticism against Musk intensified alongside sagging Tesla sales and stock prices, Trump conducted a unique press conference outside the White House, where he applauded Tesla, criticized boycotts, and purchased a Tesla himself while media captured the moment.
Tesla stockholders have voiced concerns over Musk’s responsibilities at the Department of Government Efficiency (DOGE) diverting his attention from the company. New York City’s comptroller, responsible for overseeing pension funds invested in Tesla, proposed a lawsuit accusing Musk of guiding Tesla towards financial instability.
Tesla shares, which fell approximately 6% on Wednesday, rebounded over 5% amid speculation that Musk could soon refocus on Tesla. Reports from anonymous sources suggested that Trump indicated Musk might reduce his involvement at DOGE in the upcoming weeks.
Tesla’s stock price has dropped by about 50% since reaching a peak in mid-December, as initial anticipations of reduced regulation and increased profits under Trump were replaced by anxieties over boycotts and other difficulties affecting the company. Analysts are still assessing whether the sales decline is primarily attributed to protests or other causes.
Previously optimistic analysts now acknowledge that Musk’s divisive political views are harming the company, a sentiment Musk himself has recently admitted. During a rally in Wisconsin, Musk described his role with DOGE as “a very expensive job,” noting that the value of Tesla stock, along with those held by investors, has nearly halved.
In recent weeks, Tesla vehicles have been vandalized and set ablaze, with protests taking place at numerous Tesla dealerships. Some owners have added bumper stickers to their cars stating, “I bought this before Elon went crazy.”
In Europe, consumers, particularly Germans, have been hesitant to purchase Tesla vehicles following Musk’s endorsement of a far-right party during national elections and a controversial gesture interpreted as a Nazi-like salute at a Trump inauguration event.
Financial analysts, surveyed by FactSet, anticipate Tesla will report a 7% increase in profit, forecasting earnings of 48 cents per share for the first quarter compared to the previous year. Most of Tesla’s sales in the quarter comprised its more affordable models, the 3 and Y, with fewer than 13,000 units sold of the pricier models X, S, and the Cybertruck.