Tesla confirmed on Wednesday that its global electric vehicle shipments for the first quarter had dropped by 13% compared to the previous year.
Despite the market adjusting its expectations downward as Tesla’s monthly deliveries have been sharply declining this year, Tesla still failed to meet the lowered expectations.
However, Tesla’s stock price surged over 4%, buoyed by reports that CEO Elon Musk would soon step down from his position at the Department of Government Efficiency (DOGE), as suggested by U.S. President Donald Trump to his close aides.
Disappointing Shipments
Tesla reported that its shipment figure for the first quarter stood at 336,681 vehicles.
This result falls short of even the lowered expectations. According to the Wall Street Journal (WSJ), analysts surveyed by Visible Alpha projected shipments to reach 393,960 vehicles.
Analysts widely agree that the decline is not due to issues with Tesla’s electric vehicles but rather with Musk’s political activities, which have sparked consumer backlash.
Musk has been pushing for federal government downsizing and staff reductions as the head of DOGE under the second Trump administration.
Additionally, he has been supporting far-right parties in Europe.
As a result, Tesla faces backlash from progressive consumers, its primary consumer base.
Recent polls in the U.S. indicate that Tesla’s overall brand image has deteriorated, particularly among Democratic supporters.
Analysts are also adjusting their price targets for Tesla due to this brand discontent.
Struggles in China and Germany
Tesla is struggling in China, one of its largest markets.
In February, shipments plummeted by 49% year-over-year, nearly halving.
In Germany, the heart of the European automotive industry, new registrations for Tesla vehicles fell by 76.3% in February compared to the previous year.
In the U.S., sales during January and February dropped by 2% compared to last year.
This performance is particularly stark when compared to General Motors and Hyundai, which saw increases of 17% and 11%, respectively, in the first quarter.
However, there were signs of recovery in the Chinese market last month, thanks to demand generated by the upgraded Model Y.
In March, Tesla sold 78,828 vehicles in China, narrowing its year-over-year decline to 11%. After dropping out of the top five in February, Tesla regained its position as the third-largest new vehicle brand in March.
A Pivotal Moment
Dan Ives, an analyst at Wedbush Securities known for his bullish perspective on Tesla, described Tesla’s first-quarter shipment results as a pivotal moment.
In a post on social media platform X, he stated that these shipment numbers represent a “fork in the road moment” for Tesla that could determine the company’s future.
Ives acknowledged that he expected a slowdown in shipments but did not anticipate such a significant decline. He asserted that this figure cannot be viewed through rose-colored glasses… it is a disaster by any standard.
He emphasized that Tesla is experiencing a significant brand crisis.
Meanwhile, experts believe that the sharp decline in Tesla’s first-quarter shipments has already been reflected in the stock price.
In the first quarter, Tesla’s stock fell by 36%, marking its worst performance since the fourth quarter of 2022.
This represents the third-lowest stock performance in the company’s 15-year history.
The 36% drop in stock price has erased a market capitalization of $460 billion.
