[AUSTIN] With its showrooms vandalised, production lines paused and sales tanking overseas, Tesla has had a brutal start to 2025. The automaker is about the reveal just how rough it was.
Wall Street’s expectations have come down sharply in recent months as chief executive officer Elon Musk’s political manoeuvring fuelled a consumer backlash that’s eroding global demand for the US’ top-selling electric vehicles (EVs). Tesla’s deliveries are also under pressure from a production slowdown tied to its updated Model Y SUV, a cooling EV market and broader economic uncertainty.
Analysts expect that Musk’s EV maker likely delivered about 390,000 cars in the first quarter, according to estimates compiled by Bloomberg. That’s down from the more than 460,000 handovers Wall Street had projected as at early January. Estimates for the quarter also vary widely, from a high of more than 448,000 to a low of about 315,000, underscoring the uncertainty surrounding Tesla’s outlook.
If that 390,000-vehicle estimate holds when Tesla reports production and delivery figures on Wednesday, it would represent its worst quarter in a year.
“There’s been a softening, and it’s been pretty profound,” Gene Munster, managing partner of Deepwater Asset Management, said of demand for Tesla’s vehicles.
The numbers will set the tone for the rest of 2025 as the company aims to return to growth after logging its first annual sales drop in over a decade last year. The company has plenty working against it.
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Shipments in China have slid for the past five months on a year-over-year basis, including a 49 per cent drop in February. In Europe, sales plunged by roughly half during the first two months of the year, even as industrywide EV sales grew 28 per cent. Sales figures in France showed a 37 per cent decline in March.
The picture is murkier in the US, where Musk’s blitz to cut costs and eliminate jobs across the federal government has elicited pushback that has, at times, turned violent. Some Tesla showrooms and charging stations have been vandalised in recent weeks.
Still, domestic sales through the first two months of 2025 were about 2,400 vehicles ahead of the same period last year, according to estimates from Kelley Blue Book. And while President Donald Trump’s tariffs on auto imports are expected to drive up costs for the industry, Tesla is expected to be less affected than many other companies because the vehicles it sells in the US are produced domestically.
The first quarter is typically Tesla’s slowest in terms of sales, in line with broader industry trends. On top of that, its four factories underwent weeks of planned downtime to retool a refreshed Model Y SUV.
“There’s supply disruption because of the herculean task that they did,” said Ben Kallo, a senior research analyst at Baird. “They are ramping down four factories and then re-ramping them across three different supply chains. I think that it also will spill” into the second quarter, he said.
Kallo estimates Tesla delivered about 315,000 vehicles in the first quarter, largely due to the changeover for its best-selling vehicle. That would be a roughly 19 per cent drop from the same period last year.
Aside from the Model Y, Tesla’s ageing lineup faces an increasingly crowded EV market, where competitors are rolling out fresher offerings amid stagnant demand. The company has revealed little about its product pipeline beyond a promise of more affordable vehicles in the first half of the year. Instead, Musk has focused on Tesla’s ambitions in artificial intelligence, autonomy and robotics, including a planned robotaxi service expected to launch in Austin in June.
Musk himself has fuelled backlash. His leadership of the Department of Government Efficiency, or Doge, has soured some consumers on the Tesla brand. Musk’s critics have also raised concerns about potential conflicts of interests as his companies have substantial federal contracts while he leads an aggressive push to cut government spending.
A protest movement known as Tesla Takedown held hundreds of demonstrations at Tesla locations around the world on Saturday. The group, which has condemned instances of violence, has urged people to sell their Tesla vehicles and stock.
Separately, Italian authorities say they are investigating a possible anarchist motive behind a fire that damaged 17 Tesla vehicles in Rome.
Musk has acknowledged that the backlash is having an impact on Tesla. The stock has lost about half of its value since it peaked in December after Trump was re-elected.
The headwinds have cast doubt on Musk’s assertion late last year that Tesla’s sales could grow as much as 30 per cent in 2025. When the automaker reported financial results in January, it stopped short of reaffirming that target, saying only that it expected to grow.
Garrett Nelson, an analyst with CFRA Research, said Musk appears distracted, and that Tesla could benefit from elevating another senior leader into a more visible role to ensure the company remains on track in what he considers a critical time in the company’s history.
“I think the perception is there’s a void in leadership at Tesla,” Nelson said. BLOOMBERG
