TLDR
- Tesla stock reversed early losses, rising 3.8% after report Musk will step back from Trump administration
- Q1 deliveries of 336,681 vehicles missed estimates by over 10%, marking worst quarter in nearly three years
- Tesla produced 362,615 vehicles, down 16% year-over-year
- Concerns mount about brand damage from Musk’s political activities affecting core EV buyers
- Model Y updates contributed to production challenges across all four factories
Tesla shares jumped 3.8% on Wednesday despite reporting disappointing first-quarter delivery numbers. The stock reversed earlier losses after Politico reported that CEO Elon Musk plans to step back from his role in the Trump administration “in the coming weeks.”
The electric vehicle maker delivered 336,681 vehicles in the first quarter of 2025. This fell well short of Wall Street expectations of around 378,000 vehicles.
The delivery figure represents a 13% decline compared to the same period last year. This marks the worst quarterly year-over-year decline in the company’s history.
Tesla’s first-quarter delivery total was the company’s lowest since the second quarter of 2022. Analysts and investors had already been lowering their expectations in recent weeks.
According to Politico’s Rachel Bade, President Trump has informed his inner circle that Musk will be stepping back from his current role soon. One senior official indicated Musk would likely retain an “informal role” as a White House adviser.
The news comes just hours before Trump’s scheduled press conference about new tariff plans. The president has dubbed this “Liberation Day.”
Brand Concerns Mounting
Tesla’s brand has faced challenges recently. This appears linked to Musk’s right-wing political activities and involvement with the Trump administration.
Registration data from key European markets shows significant declines. France saw Tesla registrations drop 36.8% from last year. Norway experienced a steeper 63.9% decline.
Denmark and the Netherlands reported even larger drops of 65.6% and 61% respectively. These Nordic countries have traditionally been strongholds for electric vehicle sales.
Wedbush analyst Dan Ives, typically bullish on Tesla, called the delivery numbers “a disaster on every metric.” He noted growing brand concerns and cited protests at Tesla dealerships.
Production Challenges
Tesla acknowledged production difficulties in its statement. “While the changeover of Model Y lines across all four of our factories led to the loss of several weeks of production in Q1, the ramp of the New Model Y continues to go well,” the company said.
The refreshed Model Y went on sale globally in March. Some analysts had pointed to this model changeover as a factor in lower sales.
Tesla produced 362,615 vehicles in the quarter. This represents a 16% decrease from the same period last year and a 21% drop from the fourth quarter of 2024.
The gap between production and deliveries was 26,000 vehicles. This is relatively large for Tesla and suggests inventory buildup or logistics challenges.
Wall Street Response
The stock’s recovery demonstrates that for investors, Musk’s attention matters more than quarterly delivery numbers. Tesla shares had fallen about 34% year-to-date before Wednesday’s trading.
Since mid-December, Tesla stock has dropped approximately 45% from its record high of just under $489 per share. Falling delivery estimates contributed to this decline.
Gary Black, co-founder of Future Fund Active ETF and a Tesla shareholder, expects analysts to reduce full-year 2025 delivery and earnings estimates. This could create additional headwinds for the stock.
Looking ahead, Tesla is expected to start a self-driving cab service in Austin in June. The company will report its first-quarter earnings on Tuesday, April 22.
Last year, similar delivery misses led to a 30% stock drop before Musk announced plans for a robotaxi event. That announcement helped stabilize the stock in 2024.
Musk’s potential refocus on Tesla operations could prove more significant than any single quarterly result. President Trump acknowledged this possibility on Monday, saying “At some point, Elon is going to want to go back to his company.”
Tesla also reported it deployed 10.4 GWh of energy storage products in the first quarter. This represents another aspect of the company’s business beyond electric vehicles.
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