Tesla (NASDAQ: TSLA) has been under a microscope this year. The big question had consistently been about what first-quarter deliveries would look like. Multiple reports suggested it could be a rocky quarter for Tesla, and analysts lowered their estimates. However, Tesla’s first-quarter deliveries of just under 337,000 in the first quarter came in below Wall Street’s estimates. Deliveries fell 13% year over year and came in at the lowest levels seen since 2022. Rising competition and the negative impact of Tesla CEO Elon Musk and his role with the Department of Government Efficiency (DOGE) appear to have been the main culprits. Regardless, the stock is down over 35% this year (as of April 4), but it can keep going lower. Here’s why.
Tesla’s core business is making and selling electric vehicles, and this business seems to be feeling the heat. As electric vehicle sales have seemingly been on the rise, Tesla has seen sales fall in Europe and China. Some of this can certainly be attributed to rising competition in the EV space. For instance, the Chinese electric carmaker BYD seems to be giving Tesla a run for its money. The company boasts faster charging technology and a much cheaper vehicle. In 2024, BYD sold 32% of new EV sales in China, compared to Tesla at slightly over 6%.
However, the other big elephant in the room is Musk’s role with DOGE and growing outspokenness in the political arena. At first, it was difficult to gauge the impact. But analysts and top investors are increasingly convinced that Musk’s role with DOGE and frequent posts about politics have played a role in the negative performance.
Data from the car shopping website Edmunds showed that Tesla owners have been trading in their Teslas for new or used cars at other dealerships at a record clip since Musk got involved with DOGE. Reports of vandalism to Tesla vehicles may also be deterring people from buying or holding onto their Teslas.
Investors are very concerned at this point. Ross Gerber, an early investor in Tesla, wrote in a post on X that the “… Tesla brand is severely tainted at this point. Damage is done.” Following the poor results, longtime Tesla bull Dan Ives, an analyst at Wedbush, remained bullish on Tesla long term but called what was going on a “brand tornado crisis moment.”
Media reports had recently surfaced that Musk was planning to step away from his involvement with DOGE, although Musk and the White House rejected those claims hours after the initial report. Prior to running DOGE, investors often questioned whether or not Musk could balance being CEO of Tesla and running several other companies, including X (formerly Twitter) and SpaceX. These questions have grown more frequent and gotten much louder since Musk began working with DOGE and since Tesla’s performance has struggled.
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