Tesla sales have witnessed a significant dip of 13 per cent in the first quarter of 2025, reporting the weakest quarterly figures in over three years. Between January and March 2025, sold 336,681 electric vehicles (EVs) across the globe registering a sharp drop from 386,810 units a year ago.
While the decline in sales is on expected lines, the significant quantum of drop has taken Tesla and industry experts by surprise. According to an average estimate of 15 analysts from Visible, the expected drop in sales was for a 3.7 per cent to 372,410 units. The dip in sales has been attributed to a variety of factors.
Tesla, Musk facing backlash
Tesla has been in the news for more wrong reasons than right, with reports of arson and vandalism against Tesla cars, showrooms, charging stations, and properties across Europe and North America, mostly by self-acclaimed activists. The hate against Tesla CEO, Elon Musk, might also be a major reason for the company’s lacklustre performance in the market.Â
The sluggish sales in the first quarter suggest that the once-dominant brand is struggling due to years of delayed product launches and the impact of Musk’s political involvement in the United States and Europe. Musk’s recent statements supporting several right-wing groups across the world have generated polarising opinions.
More importantly, Musk’s proximity to the US President Donald Trump and his involvement in the Trump administration has been widely criticised all across. Reports indicate that after years of enjoying a leading position among EV makers, Tesla is set to be displaced by BYD for the first time this year with a 15.7% market share, as opposed to Tesla’s 15.3% share.
Tesla’s shares dropped more than 4% before the market opened on Wednesday, but the trajectory reversed once a local media report suggested that Musk was planning to step down from his role as an adviser to Trump soon, as administration insiders increasingly view 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.
Since mid-December, the company’s shares have seen a decline of approximately 45%. This drop follows a record high after Trump’s election victory when investors anticipated that Musk’s close ties to the White House would reduce regulatory pressure on its self-driving taxi program.
Model Y facelift
Last year, Musk projected 20% to 30% sales growth in 2025, pledging to launch an affordable vehicle in the first half of the year while relying on demand for the newly introduced Cybertruck. However, little is known about the progress of the lower-cost vehicle, and demand for the expensive Cybertruck—hampered by its polarizing design and quality concerns—has been weak.
Musk did not reaffirm the growth forecast during Tesla’s January earnings call but stated that the company would return to growth this year. Tesla is scheduled to report its first-quarter earnings on April 22. In late February, the company introduced the refreshed Model Y SUV, featuring a new design and updated features, in China, followed by launches in the U.S. and Europe last month.Â
Investors are watching closely to see if the model can help counter growing competition from Chinese automakers like BYD. On Wednesday, Tesla revealed that retooling production lines for the Model Y refresh across all four of its factories resulted in several weeks of lost production during the first quarter.
With inputs from Reuters
