Tesla faced a 13% decline in vehicle deliveries for Q1 2025, marking the sharpest drop in the company’s history as political controversies and growing competition from rivals impacted its performance.
Tesla delivered 336,681 vehicles in the first quarter, a significant decrease from nearly 387,000 vehicles in the same period last year. The decline was partly attributed to a temporary production pause related to updates on the Model Y. This setback occurred amid protests over CEO Elon Musk’s political stance and his involvement in US President Donald Trump’s economic policies.
Tesla’s stock, which had already fallen 11% in 2025, dropped nearly 8% in after-hours trading. However, shares rebounded following speculation that Musk might step down from his position in the White House’s Department of Government Efficiency (DOGE). The stock ultimately closed 5% higher.
Musk’s political connections have sparked protests, boycotts, and vandalism at Tesla facilities globally. Critics, including public figures and institutional investors, argue that Musk’s increasing political engagement is distracting him from his corporate duties and harming Tesla’s image, particularly among eco-conscious consumers.
In Europe, Tesla’s sales plunged by 49% in the first two months of the year, despite the overall rise in EV sales across the continent. Analysts link this decline to Musk’s vocal support for far-right political parties in Germany and the UK, which has led to a backlash.
Additionally, competition from Chinese automaker BYD has intensified. BYD sold over 416,000 pure electric vehicles in the same quarter, surpassing Tesla in global sales with a 39% year-on-year growth. While Tesla still leads in total annual sales, analysts predict that BYD could overtake it by the end of 2025.
Tesla also faces supply chain challenges due to new global tariffs imposed by the Trump administration, which affect key production hubs in China and Mexico. The tariffs on Chinese goods have increased the cost of materials, further complicating Tesla’s operations.
Despite the setbacks, Tesla’s stock gained 5% on Wednesday after reports suggested that Musk might leave his advisory role in the White House, potentially refocusing on his electric vehicle business. According to Politico, Musk is considering stepping down from his 130-day stint at DOGE, which was confirmed by senior officials and sources close to Trump. The news provided a temporary boost to Tesla investors.
However, the White House dismissed the reports as false, and Musk himself denied the rumors, calling them “fake news” on social media. Despite the denial, the market responded positively, as Tesla shares had fallen earlier in the day due to weaker-than-expected deliveries.
