Tesla Inc. TSLA Investors and Market experts are preparing for a possible downturn in Tesla's sales this year, with concerns mounting over the brand's recent struggles.
What Happened: Tesla’s deliveries in the first three months of this year have seen a 13% decrease, marking the lowest in nearly three years.
Gene Munster, managing partner at Deepwater Asset Management, links this decline to recent damage to the Tesla brand. He anticipates further decline in growth rates this quarter and predicts that 2025 deliveries will drop 9% from the 1.79 million reported last year, reported Reuters.
Even with the introduction of the refreshed Model Y in China in late February, Deutsche Bank analysts predict a 5% sales drop this year. This prediction is based on a staggered rollout of Tesla’s anticipated cheaper car.
Meanwhile, Barclays analysts have also expressed concerns about Tesla’s future growth, stating that the first-quarter delivery number “sets a challenging path for even flat year-on-year volume in 2025.” Musk did not reaffirm his previous promise of 20% to 30% volume growth in 2025 during his January update.
Tesla cited the retooling of production lines for the refreshed Model Y at all its factories as the reason for losing several weeks of production in the first quarter.
Why It Matters: This development follows a warning from Gene Munster earlier this month, who anticipated disappointing delivery numbers for Tesla in the first quarter. Munster also stated, “The March number is likely going to be ugly. The June will likely be worse. Then things begin to slowly improve.” This prediction signals a stark reversal for Tesla, a company that once projected 20-30% growth.
This downturn in Tesla is also largely attributed to public outcry against CEO Elon Musk‘s political engagements. While reports circulated that Musk is ready for an early exit from the Trump team, both White House and the Tesla CEO have dismissed the reports as ‘Fake’.
Wedbush analyst Dan Ives cautioned, Musk’s role 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.”
Besides politics, Tesla’s outdated models have been constantly criticized by buyers. The EV maker is struggling as rivals like BYD BYDDF introduce competitive EVs, especially in China, where competition is fierce. The company is also losing market share in Europe.
Tesla stock lost more than 4% in Friday’s pre-market trading. The shares plunged nearly 30% year to date.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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