Tesla Sales Decline Amid Market Challenges and Political Backlash

Tesla Inc. has reported its lowest quarterly sales in three years, delivering nearly 337,000 electric vehicles in the first quarter of 2025, a 13 per cent decline from the same period in 2024. The news triggered a drop in Tesla’s stock price on Wednesday morning, though shares rebounded following reports that CEO Elon Musk may soon step back from his role in the Trump administration.

Tesla attributed the sales decline to the transition to a new version of its best-selling vehicle, the Model Y. The company had previously announced a temporary suspension of Model Y production in January, which may have impacted deliveries. Tesla also cautioned investors that the quarterly delivery numbers provide only a partial view of its overall financial health, with full earnings results scheduled for release on April 22.

In a filing with the U.S. Securities and Exchange Commission (SEC), Tesla noted that revenue would depend on several factors, including the average selling price, production costs, and foreign exchange fluctuations. The decline comes as Tesla faces increasing competition from Chinese automaker BYD and other global rivals. However, some analysts believe the company's challenges surpass market competition and production delays.

Musk’s role in the Trump administration has been a focal point of criticism. As head of the Department of Government Efficiency (DOGE), Musk has played a significant role in federal budget-cutting initiatives. His involvement has sparked global protests, including "Tesla Takedown" demonstrations at dealerships in the U.S. and Europe. Additionally, Tesla vehicles have been targeted in acts of vandalism, prompting former President Trump to call for tougher penalties, including labelling such actions as "domestic terrorism."

The company’s declining sales have raised concerns among investors and financial institutions. Randi Weingarten, president of the American Federation of Teachers, wrote to multiple public pension funds, urging them to scrutinise their Tesla holdings due to the company's financial struggles.

New York City Comptroller Brad Lander announced this week that the city is exploring legal action against Tesla. He stated that New York City’s pension system has suffered a $300 million loss in the past three months due to Tesla’s declining stock value. "Elon Musk is so distracted that he's driving Tesla off a financial cliff," Lander said.