Importance Score: 45 / 100 🔵
Tesla Deliveries Decline Amidst Musk Controversy
Electric vehicle (EV) giant Tesla experienced a significant setback with deliveries plummeting 13% in the first quarter. This downturn coincides with CEO Elon Musk facing public criticism regarding his involvement with President Trump and the Department of Government Efficiency (DOGE). The disappointing figures have raised concerns among investors and analysts about the company’s near-term performance.
First Quarter Delivery Figures Fall Short
The pioneering EV manufacturer reported 336,681 deliveries during the three-month period, a key indicator of sales. This figure is considerably below Wall Street expectations and represents a decrease from the 386,810 vehicles delivered during the same timeframe last year. Analysts had anticipated sales exceeding 390,000 units, according to Bloomberg data.
Stock Reaction and Analyst Perspectives
Initially, Tesla shares reacted negatively, dropping as much as 6% in Wednesday trading. However, the stock recovered and climbed over 5% following reports suggesting Musk would reduce his engagement with the Trump administration.
Despite the intraday recovery, Tesla stock remains down approximately 30% since the beginning of the year.
Wedbush analyst Dan Ives, known for his previously optimistic outlook on Tesla, described the delivery report as a “disaster on every metric.”
Analyst Criticizes Musk’s Dual Roles
“Musk needs to put an end to this political turmoil and find a balance between his roles as CEO of Tesla and his involvement with DOGE,” Ives stated in a client note. He added, “The long-term potential remains very promising, but Tesla is currently navigating a significant crisis, largely of its own making.”
Ives further commented, “We maintain a bullish stance on Tesla‘s long-term prospects, but Musk must address these issues, or Tesla may face more challenging times ahead.”
Rivian Also Reports Delivery Drop
Rivian, another electric vehicle manufacturer, also announced unfavorable results. Their first-quarter deliveries decreased by 36%, falling to 8,640 vehicles from 13,588 in the previous year. Although these figures aligned with expectations, Rivian‘s stock also experienced a 6% decline.
Rivian had previously cautioned about anticipated softer demand and cited the impact of wildfires in California as a contributing factor.
Supply Chain and Tariff Challenges
Both Tesla and Rivian are expected to encounter hurdles related to supply chain disruptions and increased expenses due to the implementation of 25% tariffs on imported cars and auto parts by the Trump administration.
However, they are considered to be in a relatively stronger position compared to competitors, particularly foreign brands like Volkswagen, because they manufacture vehicles sold in the US within the country.
Model 3 and Model Y Remain Key Models
For Tesla, the majority of first-quarter deliveries consisted of the Model 3 sedan and Model Y crossover SUV, totaling 323,800 units. Other models, including the Cybertruck, accounted for a smaller portion, with 12,881 deliveries.
Production Adjustments and Vandalism Incidents
Tesla acknowledged that “the transition of Model Y production lines across all four factories resulted in several weeks of lost production in Q1, but the ramp-up of the New Model Y is progressing well,” according to a company statement.
Recently, Tesla dealerships in the US and internationally have been targeted by acts of vandalism and arson, reportedly in response to Musk’s connections to the Trump administration.
Musk’s unofficial leadership of DOGE, an organization that has streamlined federal agencies to reduce government spending, has also drawn controversy.
Attorney General Pam Bondi and others have characterized these attacks as domestic terrorism.
Competition in China and Trade-ins
Adding to challenges, Tesla is facing intense competition in China, a crucial growth market, where local rivals like BYD have rapidly expanded their market share.
A report from Edmunds indicated that Tesla trade-ins for other new or used vehicles at dealerships reached their “highest ever share” in March, signaling potential shifts in consumer preferences.
Musk Attempts to Reassure Employees
In an effort to reassure employees, Musk addressed Tesla staff at an all-hands meeting last month, urging them to “hang on to your stock.”
During the meeting, Musk presented Tesla‘s long-term product roadmap, emphasizing the long-awaited fully autonomous driving software, which he claimed would significantly enhance the value proposition of the company’s vehicles.
He also criticized those responsible for vandalizing Tesla locations due to his political activities.
“I understand if you choose not to buy our product, but there is no need to resort to burning it down,” Musk stated, labeling such actions as “unreasonable.”