The Economist: As sales slide and support wanes, Musk returns to the Tesla driver's Seat

Key topicsQ1 2025 Tesla sales, revenue, and profits plunge sharplyMusk’s partisan politics hurt demand; backlash spans blue & red statesRising used‑Tesla listings and fierce GM/BYD rivalry threaten future.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..From The Economist, published under licence. The original article can be found on www.economist.com© 2025 The Economist Newspaper Limited. All rights reserved..The Economist .“The future of Tesla is brighter than ever.” So declared Elon Musk during an earnings call on April 22nd. According to the carmaker’s boss, Tesla remains on course to become the world’s most valuable firm, worth as much as the next five companies combined, as it churns out fleets of autonomous taxis and armies of humanoid robots. As Mr Musk gazes into the future, however, investors remain transfixed by the car crash that is currently occurring at Tesla. Revenue from car sales in the first quarter was down by a fifth, year on year. Operating profit plummeted by two-thirds. Far from racing ahead, Tesla’s market value has fallen by roughly half since its peak of around $1.5trn in December. Earlier this month the company reported that it delivered just 337,000 vehicles in the quarter, 13% fewer than a year before and well below analysts’ expectations (see chart 1). In Europe, which accounts for around a fifth of sales, registrations of new Teslas slid by 40%. In America, the carmaker’s biggest market, sales fell by almost 9%, even as those of all electric vehicles rose by 11%. Can Tesla recover?.Slumping sales partly reflect a backlash against the politics of Mr Musk, who has lately refashioned himself into a right-wing activist and nemesis of America’s “deep state”. Tesla’s showrooms have faced protests and arson attacks since Mr Musk took his chainsaw to the federal government as head of Donald Trump’s Department of Government Efficiency. Some analysts had hoped that, at least in America, a boom in Tesla sales to right-wing consumers would balance out declining sales to left-wing ones. TD Cowen, an investment bank, recently estimated that although Mr Musk’s political activities could cut sales by more than 100,000 vehicles a year in America’s Democrat-leaning counties, they could boost them by twice that in Republican-leaning ones..Read more:.Musk’s political moves shake Tesla as stock drops 45%.That type of partisan rebalancing was on display last year as Mr Musk completed his MAGA conversion. Our analysis, drawing on figures from S&P Global, a data provider, suggests that Tesla’s sales shrank in left-leaning cities in 2024 while growing in right-leaning ones (see chart 2). For example, in the San Francisco Bay Area, which favoured Kamala Harris in the presidential election by nearly three-to-one, sales fell by more than 16% last year; in Tampa, which favoured Mr Trump by a wide margin, they rose by around 18%..Unfortunately for Mr Musk, even Republicans now appear to be spurning his EVs. Trends in the used-car market suggest that a growing number of Tesla drivers in both blue and red states are putting their cars up for sale. Figures from MarketCheck, which tracks the inventories of more than 75,000 dealerships across America, show that listings of used Teslas have risen by two-thirds since the start of the year, twice as much as for other EVs (see chart 3). Listings for the Model 3 have increased by 63%; those for the Model Y have rocketed by 80%. The pattern can be seen in both left-leaning states, such as Massachusetts and New York, and right-leaning ones, such as Indiana and South Carolina. That hints at a deeper problem for Tesla: stiffening competition. By contrast with its early years, when it was essentially unchallenged, the carmaker now faces serious threats from rivals such as General Motors (in America) and BYD (in China and elsewhere). It cannot afford a distracted boss. To investors’ relief, Mr Musk announced during the earnings call that he would now be spending “far more” of his time away from Washington and at the company. They will be hoping he can speedily reverse Tesla out of its mess.

The Economist: As sales slide and support wanes, Musk returns to the Tesla driver's Seat

Key topics

From The Economist, published under licence. The original article can be found on www.economist.com

© 2025 The Economist Newspaper Limited. All rights reserved.

The Economist

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