TLDR:
- Tesla delivered 337,000 vehicles in Q1 2025, a 13% year-over-year decline
- Reports suggest Elon Musk may leave his DOGE position early, which sent Tesla shares higher despite poor delivery numbers
- Tesla stock fell 4.9% in premarket trading Friday following announcement of 34% retaliatory tariffs from China
- European Union sales dropped significantly while other markets appear more resilient
- Analysts suggest vehicle refreshes and Musk’s return to full-time Tesla duties could improve performance in coming quarters
Tesla’s stock has been on a roller coaster ride this week, responding to a combination of disappointing delivery numbers, potential leadership changes, and global trade tensions.
The electric vehicle maker reported 337,000 vehicle deliveries for the first quarter of 2025. This represents approximately 40,000 fewer cars than Wall Street had expected and a 13% decline compared to the same period last year.
Despite these disappointing figures, Tesla shares rose 5.3% on Wednesday. This surprising gain came after Politico reported that CEO Elon Musk might end his role at the Department of Government Efficiency (DOGE) earlier than expected.
The White House quickly dismissed the report as “garbage.” However, Wall Street analysts appear to favor the idea of Musk stepping back from his political duties.
Political Impacts on Tesla’s Performance
Tesla’s business has faced notable challenges since Musk took on his role in the Trump administration following the January 2025 inauguration.
The company’s vehicles and dealerships have reportedly been targeted by protests and vandalism in the United States. Meanwhile, Tesla’s market share in the European Union has declined substantially.
According to reports, Tesla sales dropped 49% in the EU even as the broader industry grew. This suggests the political backlash has had a real impact on consumer sentiment in certain markets.
Morningstar analyst Seth Goldstein noted the timing is particularly challenging for Tesla. The company is supposed to be launching a new vehicle and a robotaxi service in 2025, making focused leadership especially important.
“With Musk spending considerable time helping the US government, the market may have questioned if Musk was distracted from his role in leading Tesla,” Goldstein wrote in his Wednesday report.
Market Response and Future Outlook
Wedbush analyst Dan Ives described Musk “slowly but surely moving away from his leadership position in DOGE” as “very bullish” for Tesla. He maintains a Buy rating and a $450 price target.
Not all analysts are as optimistic. Guggenheim’s Ronald Jewsikow, who rates the stock a Sell with a $170 price target, acknowledged the positive narrative but remains cautious overall.
Tesla stock has fallen from around $425 per share before the presidential inauguration to below $270 after Thursday’s close. This represents a significant decline during Musk’s government service.
On Friday morning, shares fell another 4.9% in premarket trading to $254.30. This drop came as global markets reacted to news that China would impose 34% retaliatory tariffs on the United States.
The broader market also suffered, with S&P 500 futures dropping 3.1% and Dow Jones Industrial Average futures falling 2.9% on the trade news.
Product Refresh and Long-Term Strategy
Some analysts believe Tesla’s aging product lineup may also be contributing to its sales challenges. Until recently, top-selling vehicles like the Model Y have existed in basically the same form since their 2020 launch.
Tesla has now introduced its “Juniper” refresh for the Model Y, featuring exterior design changes, upgraded interior materials, and slightly improved battery range.
CFRA analyst Garrett Nelson sees a sales rebound coming in the second quarter. He maintains a Buy rating with a $360 price target for the stock.
Looking further ahead, refreshes for Tesla’s Model S and Model X are expected by the end of 2025. These updates could potentially set the stage for a stronger performance in 2026.
Tesla’s long-term strategy appears focused on transitioning beyond traditional automotive sales toward software-as-a-service, artificial intelligence, and robotics.
The company has advantages in the self-driving vehicle space due to its large fleet generating training data, which is processed by its supercomputer, Dojo.
Tesla may also be well-positioned to navigate the Trump administration’s 25% tariff on imported cars and auto parts. All its U.S.-sold vehicles are assembled in factories in Texas and California, though they do incorporate some foreign parts.
Despite these potential advantages, Tesla’s current price-to-earnings ratio of 101 indicates the stock remains expensive given its near-term challenges.
For Tesla shareholders, the coming months will be critical. They’ll be watching closely for signs of sales recovery and Musk’s potential return to full-time leadership at the company.
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