A report from Politico, citing sources, says the CEO will step back from the DOGE role to focus on Tesla.
Tesla (NASDAQ:TSLA) stock was volatile on Wednesday, sinking in early trading on bad sales news but then rising in afternoon trading on news reports related to Tesla CEO Elon Musk.
Tesla shares sank 6% in early morning trading as the EV reported a significant decline in sales in the first quarter. The company delivered, or sold, 336,681 cars in Q1, which was 13% fewer than the 386,810 sold in the same quarter a year ago. That was also way down from the 495,570 sold in Q4.
It also came in below analysts' estimates of between 378,000 and 390,000 deliveries, according to Electrek.
The Tesla Model 3/Y accounted for 323,800 of the sales, down 12% year-over-year, while all other models had 12,881 deliveries.
Further, Tesla produced 362,615 vehicles in the quarter, down 19% year-over-year from 433,371 in the same quarter a year ago. It produced 459,445 in Q4 of 2024.
The numbers throughout Europe are even worse, as sales in France were down 41% in Q1, while they fell 55% in Sweden, 50% in the Netherlands, and 48% in Austria, according to Electrek.
The company will report its full financial results for the first quarter on April 22 after the market closes.
Brand Damage Impact
It is a stunning decline for a company that has routinely reported double-digit quarterly sales increases up until last year. In 2024, sales were down about 1%, after 10 years of sales increases. In the prior three years alone, Tesla saw sales climb 38% in 2023, 35% in 2022, and 87% in 2021.
The Tesla release does not attribute the sales declines to CEO Elon Musk’s controversial role in politics as the leader of Trump’s Department of Government Efficiency. Instead, it does mention lost production time.
“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,” Tesla officials said in a release.
But analysts say his foray into politics has damaged the brand and hurt sales.
“Overall, these numbers came in below already low expectations,” Gene Munster, managing partner at Deepwater Asset Management wrote in a post on X.
Munster now expects 1.63 million deliveries for fiscal 2025, a 9% decline. Before the first quarter results, Munster was anticipating a 5% sales decline. He anticipates a 15% drop in sales in the second quarter, a 10% decline in Q3 and flat sales in Q4.
“This is our first look at the impact of recent brand damage — and it appears to be the primary driver behind this quarter’s delivery decline, Munster wrote on X. “Absent the brand damage, deliveries likely would have been up 10% year-over-year.”
So Why Is Tesla Stock Up?
After that initial 6% drop in price on the weak sales news, Tesla's stock began to surge higher. As of 2:30 p.m. ET, it was up more than 5% on the day, a wild turnaround. It went from a low of about $252 per share on Wednesday morning up to around $283 per share as of mid-afternoon.
The catalyst was a report from Politico, and later from multiple outlets, that Musk will be “stepping back” from his role in the Trump Administration.
The Politico article cites three Trump insiders as its sources. The article said both Trump and Musk agreed that “it will soon be time for Musk to return to his businesses and take on a supporting role.”
This also follows a political setback for Musk when he campaigned hard for a Republican to win a state supreme court seat in Wisconsin, but the Democratic candidate won.
Analysts and investors have long called for Musk to get out of politics and put his focus back on Tesla, so the development, if true, pleased investors. But only time will tell if Musk can get Tesla back on track or if the damage has already been done.