Tesla Delivery Drop: Worst Numbers in Two Years & Musk Backlash

Tesla Experiences Quarterly Sales Decline Amidst Controversy

Tesla reported 336,681 vehicle deliveries, representing its weakest quarterly performance in over two years. This downturn coincides with increasing scrutiny surrounding CEO Elon Musk’s engagement in political activities.

Musk's Political Involvement and Potential Impact

The decrease in sales occurs as Musk maintains a prominent role in DOGE, described as an “advisory body” responsible for workforce reductions within federal agencies and the proposed elimination of various programs. His participation in governmental affairs has generated considerable controversy and public disapproval, prompting questions about its potential repercussions for Tesla’s sales figures.

Recently, a prominent Wall Street analyst urged Musk to prioritize his business operations over political involvement.

Production and Sales Figures

Compared to the 495,570 vehicles delivered in Q4 2024 and 386,810 in the first quarter of the previous year, the current numbers indicate a significant decline. Tesla’s production output also decreased to 362,615 units, partially attributed to the transition of production lines for the updated Model Y, which launched globally in March.

According to Tesla’s official statement, “While the changeover of Model Y lines across all four of our factories led to the loss of several weeks of production in Q1, the ramp of the New Model Y continues to go well.”

Market expectations, as compiled by FactSet, averaged 408,000 EV deliveries for the January to March period. However, several analysts revised their forecasts downward to below 400,000 in recent weeks, influenced by “Tesla Takedown” protests and declining international sales.

Regional Sales Performance

Tesla does not disclose a regional breakdown of its delivery numbers, but sales have demonstrably decreased in both Europe and China during the first quarter.

European sales experienced a 49% year-over-year decrease in the first two months of the year, despite overall growth in EV sales, as reported by the European Automobile Manufacturer’s Association.

Germany, a key market and home to a Tesla gigafactory, witnessed an even more substantial decline. Tesla sales in Germany fell by 76% in February, reaching only 1,429 units compared to 6,038 in 2024. This reduction followed Musk’s public support for Germany’s far-right AfD party during the recent national election.

Preliminary data from March indicates a continuation of this trend across Europe. For instance, the French trade association PFA reported 3,159 Tesla deliveries, a 37% decrease from March 2024 and a 41% decline for the quarter. Sweden also saw a significant drop in Tesla sales, with a 64% decrease in March.

Despite these declines, overall new EV sales in Europe increased by 28.4%, now representing 15.2% of the total EU market share, even as overall new car registrations decreased.

Challenges in the Chinese Market

In China, a crucial market for Tesla, sales of vehicles manufactured in Shanghai decreased in March. This is largely due to increased competition from BYD, which surpassed Tesla in revenue in 2024, and other domestic manufacturers like Geely. Tesla sold 78,828 EVs in China in March, a decrease of 11.5% year-over-year, although this represents an increase from the 30,688 cars sold in February.

Stock Performance and Future Outlook

Tesla has faced a challenging start to the year, with its stock reaching its lowest point since 2022. This is attributed to mounting pressures, growing criticism of Musk, and an aging vehicle lineup. The popularity of the Cybertruck, while notable, has not been sufficient to reverse the downward trend.

Tesla is banking on the refreshed Model Y and potential future upgrades to revitalize sales. The company recently introduced 0% financing on the updated Model Y range in China. Furthermore, Tesla has hinted at the development of new, more affordable models, details of which are yet to be revealed.

A Looming Challenge for Tesla

Following the release of recent figures, Tesla analyst Dan Ives of Wedbush has urged Elon Musk to improve his leadership of both DOGE and Tesla. Ives warned that failure to do so could result in significant difficulties for the company.

The analyst’s assessment comes amid a series of challenges for TSLA, including demonstrations at Tesla retail locations and reported incidents involving Tesla drivers in various regions. These issues, coupled with ongoing concerns regarding the Tesla brand, contributed to a negative reception of the latest delivery numbers.

Ives characterized the results as a setback for those optimistic about Tesla’s performance, stating that a realistic evaluation reveals shortcomings across multiple key metrics.

Despite these concerns, Wedbush has retained its “Outperform” rating for Tesla. This decision is based on the firm’s continued belief in the company’s prospects within the autonomous driving sector.

The Robotaxi Launch: A Critical Test

The potential for Tesla to achieve full self-driving capability remains a key factor in its valuation. The company is planning to introduce a robotaxi service in Austin later this year.

This launch is anticipated to be a crucial moment, determining whether Tesla can ultimately fulfill the ambitious predictions made by its CEO. The success of the robotaxi program will be closely watched by investors and industry observers.

This report has been updated to reflect commentary from financial markets.