Tesla is facing one of its most challenging periods as the electric vehicle manufacturer reported its worst quarterly sales figures in nearly three years. The company's stock has taken a significant hit as investors grapple with concerns about brand damage and declining consumer interest, exacerbated by CEO Elon Musk's deep involvement in politics.
 |
|---|
| Tesla Inc's stock performance chart illustrating a significant decline following poor quarterly sales figures |
Disastrous Q1 Delivery Numbers
Tesla shocked shareholders with a 13% decline in vehicle deliveries for the first quarter of 2025, marking the worst quarterly sales performance since spring 2022. The company delivered just 355,041 vehicles, falling significantly below even the most pessimistic analyst forecasts. JPMorgan, which had the lowest market estimate at 355,041 deliveries, described the situation as reflecting unprecedented brand damage to the Tesla brand. The investment bank has maintained an Underweight rating on Tesla shares with a price target of $120—less than half of the company's current stock price.
Stock Market Reaction
Investor reaction has been swift and severe. Tesla shares plunged 5.6% following the delivery report, extending the company's troubles in 2025. The stock briefly rallied earlier in the week, gaining 5% after reports suggested Musk might step away from his government role to refocus on Tesla. However, these gains quickly evaporated, with the stock dropping 3.5% in after-hours trading when Musk dismissed the reports as fake news. The volatility highlights how closely Tesla's market performance has become tied to Musk's political activities.
Political Entanglements and Brand Impact
Elon Musk's increasing political involvement appears to be taking a toll on Tesla's brand. As head of President Trump's government efficiency task force (DOGE), Musk has been spending significant time in Washington rather than focusing on his struggling automotive business. His recent political endeavors have been particularly costly—both financially and reputationally. Musk spent nearly $25 million supporting right-wing candidate Brad Schimel in Wisconsin's state supreme court race, framing the election in apocalyptic terms as affecting the entire destiny of humanity. Schimel's subsequent loss to liberal judge Susan Crawford has been viewed by many political observers as a referendum on Musk and his DOGE initiatives.
Consumer Backlash
The consumer reaction to Musk's political activities has been severe enough to prompt JPMorgan analysts to wonder if they may have underestimated the degree of consumer reaction to Tesla's cars. Reports of anti-Tesla boycotts have emerged, with some Tesla owners reportedly afraid to leave their vehicles unattended due to vandalism concerns. Wedbush analyst Dan Ives, typically bullish on Tesla, has warned that major protests erupting globally at Tesla dealerships, Tesla cars being keyed and a full brand crisis tornado are creating a dark black cloud over Tesla's stock.
Revised Outlook
JPMorgan has reduced its earnings per share estimates for Tesla to $0.36 from $0.40 for Q1 and to $2.30 from $2.35 for the fiscal year. The bank has also lowered its delivery outlook to 404,000 vehicles in Q2 2025 (down from 418,000 previously) and 1,715,000 for the full fiscal year 2025 (down from 1,775,000). While some analysts point to production upgrades as partially responsible for reduced output, the extent of the delivery shortfall suggests deeper problems with consumer demand.
Future Challenges
Tesla faces additional headwinds from President Trump's tariff policies, though analysts have suggested the company may be somewhat insulated compared to other firms. Meanwhile, Musk continues to promote Tesla's future technologies, recently telling staff they would make history by turning scarce resources into an infinitely sustainable abundance and promising a future where people can literally just have anything you want. However, with the company's core automotive business showing significant signs of distress, investors are increasingly demanding that Musk refocus his attention on Tesla rather than his political ambitions.