Tesla first-quarter sales slump on Musk backlash, weak demand

Tesla’s first-quarter sales slumped 13%, its weakest performance in almost three years, in a backlash to CEO Elon Musk’s embrace of far-right politics and as consumers seek opt for newer models from rival electric-vehicle makers.

Shares of the automaker fell more than 2% on Wednesday as the company recorded a bigger-than-expected drop in sales to 336,681 units in the three months to end-March.

Despite more people buying electric vehicles globally, Tesla’s sales in Europe and China have slumped, ceding market share to local rivals, while Musk’s political stance has prompted vandalism of Tesla cars and dealerships.

A year ago, Tesla had delivered 386,810 vehicles and this time the expectation was for 372,410, according to an average estimate of 15 analysts from Visible Alpha.

“We are not going to look at these numbers with rose-coloured glasses ... they were a disaster on every metric. The Street [Wall Street] and us knew a bad first quarter was coming but this was even worse than expected,” said Wedbush Securities analyst Dan Ives.

Last year Musk forecast 20%-30% sales growth for 2025, promising to launch an affordable vehicle in the first half of the year.

But his advisory role to US President Donald Trump, where he has been instrumental in firing thousands of federal workers and cutting humanitarian aid, has sparked discontent among some customers.

“In the near term it is understandable to worry over declining margins and sales in the same moment impacting earnings growth and revenues,” said Brian Mulberry, client portfolio manager at Zacks Investment Management, which owns Tesla shares.

Protests at Tesla stores in the US and Europe have increased and some data indicates an increase in Tesla owners trading in their vehicles.

Meanwhile, investors are waiting to see if refreshed models such as the Model Y and incentives have helped counter weak demand and tough race from Chinese rivals including BYD and European competitors such as Volkswagen and BMW.

China’s BYD is set to unseat Tesla as the top global seller of electric vehicles for the first time this year with a 15.7% market share, ahead of Tesla’s 15.3%, according to Counterpoint Research.

Tesla’s sales in key European markets fell again in March, with those in France and Sweden dropping for a third straight month.

Tesla started offering the refreshed Model Y with updated styling and enhanced interiors in China late February and in the US and Europe last month.

Data from auto industry associations and analysts’ estimates point to notable declines in Tesla sales during the first two months of the year in the US, Europe, and China.

Tesla has indicated plans to launch a lower-priced model based on its existing platform this year, but is yet to release specific details about the vehicle.

Its pricey Cybertruck pickup, launched in late 2023, has experienced limited demand due to its polarising trapezoidal design and quality concerns. Tesla recently recalled nearly all Cybertrucks to address a potential exterior panel issue.

While Tesla may see less pain from the new 25% tariffs on imported vehicles due to its US-based manufacturing, Musk has said cost implications are “significant”. Tesla has also warned about potential retaliatory tariffs in response to the levies.

Reuters