Tesla CEO Elon Musk promised that the company would resume growth in 2025 following its first-ever sales decline in 2024. However, the odds appear to be against him. The once-dominant electric car brand’s reputation has been damaged by relentless protests in numerous nations against the billionaire’s role in United States President Donald Trump’s administration and far-right politics in Europe.
One of the main reasons for Tesla’s 13% quarterly delivery decline on April 2nd—the lowest in almost three years—was that. Analysts and investors are now preparing for another decline in Tesla sales this year.
“This is our first look at the impact of recent brand damage—and it appears to be the primary driver behind this quarter’s delivery decline. These growth rates will likely deteriorate further this quarter,” Gene Munster, managing partner at Deepwater Asset Management, said on X.
According to Munster, deliveries in 2025 will be 9% less than the USD 1.79 million Tesla reported the previous year. Politics is not the only factor. Even as competitors, such as BYD in China—where competition is particularly fierce—have launched EVs that rival the well-liked Tesla Model Y SUV, fans have long lamented the automaker’s ageing lineup.
Additionally, Tesla is losing ground in Europe. Investors are keeping an eye on whether the company’s decision to update the Model Y will have an impact on sales in the upcoming quarters. Deliveries of the model will begin in China in late February. However, assuming a phased rollout of Tesla’s expected lower-priced vehicle, analysts at Deutsche Bank predict a 5% decline in sales this year.
They stated that with additional incentives and profitable financial agreements, Tesla is anticipated to prioritise delivery volumes at the expense of margins once more this year. When and how much a less expensive model will cost has not been disclosed by Tesla.
Gary Black, managing partner of Tesla shareholder The Future Fund, claimed that Tesla’s 2025 delivery and profit “will go much lower” if the less expensive car is just a stripped-down version of an existing model rather than a new product that appeals to more consumers.
According to Barclays analysts the first-quarter delivery figure “sets a challenging path for even flat year-on-year volume in 2025.”
Musk said in 2024 that he would increase production volume by 20 to 30% in 2025. In January this year, he did not restate this, instead stating that Tesla was “working hard” to increase its yearly volumes. According to the carmaker, several weeks of production were lost during the first quarter as a result of retooling production lines for the updated Model Y at all four of its factories.
Poor Sales Numbers Galore
As Trump went all “Hulk Smash” in his tariff warfare against America’s allies and adversaries alike, to complicate matters, he announced steep 25% tariffs on imported cars entering US shores, resulting in automakers scrambling for options like layoffs, pauses in car shipments, and delayed price hikes. While Tesla will be less affected than rivals, the EV giant imports parts, and Musk has said the cost impact from tariffs will not be trivial.
“Musk’s role in spearheading federal cost-cutting in the United States and support of far-right parties in Germany and other nations have produced a sharp response around the world. Protests against Musk outside Tesla showrooms have spiked, and the EV maker’s cars and charging stations globally have become targets for vandalism. Some Tesla owners have been looking to disassociate themselves from Musk, and data has shown many are trading in their vehicles,” Reuters reported.
What is mind-boggling about Tesla’s poor sales numbers in Europe and China is that the overall demand for EVs has not slowed down. In the January–March period, the company globally recorded a bigger-than-expected drop in sales to 336,681 vehicles, down from 386,810 units a year ago. The expectation was for a 3.7% drop to 372,410 vehicles delivered, according to an average estimate of 15 analysts from Visible Alpha—but in recent days, analysts had braced for even worse figures following Tesla’s first-ever annual sales decline in 2024.
“The brand crisis issues are clearly having a negative impact on Tesla… there is no debate,” long-time Tesla bull Dan Ives, an analyst at Wedbush Securities, said in a note, adding the delivery numbers “were a disaster.” The company has lost about 45% of its value since mid-December, following the record high after Trump’s election win, when investors expected the billionaire’s close ties to the White House to ease regulatory pressure over its self-driving taxi programme.
Talking about 2025, Musk has now forecast 20% to 30% sales growth in 2025, promising to launch an affordable vehicle in the first half of the year and banking on demand for its newest vehicle, the Cybertruck. However, there is little or no information on whether the EV maker will roll out the “cheaper vehicle” as promised by the Tesla boss a few months back. Musk did not reiterate the growth forecast on the January earnings call, but said Tesla would return to growth this year. Tesla is set to report first-quarter earnings on April 22.
Tesla has started offering the refreshed Model Y SUV with a new look and updated features in China, the US, and Europe. Investors are waiting to see if demand for the model can counter competition from Chinese rivals including BYD. After enjoying a leading position among EV makers for years, the EV giant is set to be unseated by BYD for the first time in 2025, with a 15.7% market share, according to Counterpoint Research. Add the drop in sales in key European markets like France and Sweden, and things look bleak for the automaker.
Brand Damage Amid Doubts Over Musk’s DOGE Role
There was a glimmer of hope for Tesla investors, as a Politico report stated Musk was planning to step down from his role as Trump’s advisor soon, with “Republican administration insiders increasingly viewing the billionaire as a political liability.” However, the White House dismissed the report, saying the tech billionaire will stay on to complete his mission to slash government spending and downsize the federal workforce.
In fact, the Republican recently gave Musk a fresh endorsement amid criticism of the billionaire’s government reduction project and said he can stay “as long as he likes” but will eventually return to his businesses. The Tesla boss, when he joined DOGE (Department of Government Efficiency), was given a 130-day mandate as a special government employee, which expires around late May.
Despite Tesla’s market bloodbath (the automaker’s stock value has dropped 45% from its peak of USD 488.54 in mid-December), Musk is still the richest person in the world.
As the EV manufacturer imports large amounts of battery-making materials, Musk has stated that Trump’s auto tariffs will increase costs for the company. Tariffs on such parts could raise the price of Tesla vehicles by at least 5% to 10%, according to Morningstar analysts.
However, it is Musk’s support of far-right European politics and his role as Trump’s adviser at the Department of Government Efficiency (DOGE)—which is in charge of precipitous cuts to US federal employees and funding for humanitarian initiatives—that might prove to be more expensive for Tesla in the long run. Incidents like vandalism of Tesla vehicles, showrooms, and charging stations are only hurting the automaker’s brand image.
Renowned Tesla bull Dan Ives, a Wedbush analyst, stated that Musk’s position at DOGE “is not sustainable, and the longer Musk stays at DOGE, this adds more risk to the Tesla story and could face permanent brand damage.”
To make matters worse, Sweden’s largest insurer, Folksam, recently sold its stake in Tesla over concerns about the company’s stance on workers’ rights, as the venture is facing a backlash from unions and some pension funds in the Nordic region over its refusal to accept a demand from Swedish mechanics for collective bargaining rights covering wages and other conditions.