Tesla records worst sales drop ever amidst political backlash

Tesla's first-quarter sales have taken a painful hit, dropping by 13% YoY - the company's weakest performance in nearly three years. The company reported delivering 336,681 vehicles, a sharp decline from the 386,810 units sold in the same period last year. The reported figure fell even short of the analysts' expected 372,410 vehicles - a number that was already adjusted down.

The sales slump reflects a combination of factors, including Tesla's aging vehicle lineup and Musk's controversial political involvement in the US and Europe. Across European markets and China, sales have been particularly weak, despite the overall growth in EV adoption. Musk's apparent support of far-right political parties in Germany and other nations, along with his role in US federal cost-cutting, has sparked widespread protests and vandalism targeting Tesla vehicles and dealerships. Some Tesla owners have even traded in their vehicles to distance themselves from Musk's public image.

Here's an interesting bit, though - while the company's stock fell in pre-market trading on Wednesday, as soon as the market opened this morning, the shares are staging a strong recovery and are trading at $281.50 at the time of writing. Wedbush Securities analyst Dan Ives described the sales figures as "a disaster on every metric," noting that the results were worse than anticipated, and yet the market performance is defying expectations.

Looking ahead, Tesla's goal of achieving 20% to 30% sales growth in 2025 sounds rather far-fetched. The company is expected to launch a more affordable vehicle later this year, but details are scarce. Meanwhile, Chinese competitor BYD overtook Tesla as the top global EV seller, holding a projected 15.7% market share compared to Tesla's 15.3%, according to Counterpoint Research.

Tesla's sales in key European markets continue to decline, with France and Sweden experiencing a third consecutive month of drops. Investors are hopeful that the refreshed model Model Y and new incentives will help counteract the weakening demand and competition from rivals such as BYD, Volkswagen, and BMW. The Cybertruck, launched in late 2023, is turning into a market flop as it fell short of its initial expectations and early adopters are facing quality issues, including a recent recall of nearly all units for a panel issue.

And just to top it all off, we have the new tariffs on imported vehicles. Even Tesla is anticipating "significant" cost implications. The company also warned of potential retaliatory tariffs - the outlook for the entire automotive industry is far from rosy this year, but Tesla might be taking a bigger hit than anyone else.

Source