Tesla investors are bracing for a drop in vehicle deliveries in the first quarter as competition against CEO Elon Musk's policies intensifies waning demand for the electric carmaker's aging lineup.
Musk has promised that Tesla will return to growth this year after its annual deliveries fell for the first time in 2024, and Wall Street will be watching to see how much the revamped Model Y SUV and incentives have contributed.
"We're seeing a significant deterioration in Tesla's brand reputation around the world essentially," said Ken Mahoney, chief executive of Mahoney Asset Management, which owns Tesla stock.
"The brand has become much more politicized than any public company's brand should be."
On Wednesday (02.04), Tesla will present its first-quarter shipment and production figures. The company's stock is down about 4% in premarket trading and is down 35% this year.
Wall Street expects Tesla to have delivered about 373,000 vehicles in the January-March period, according to the average of 15 analyst estimates from "Visible Alpha," which were refreshed in the past 30 days to reflect growing demand concerns. That would represent a 3.6 percent drop from the same period a year earlier, when 386,810 vehicles were delivered.
Some investors and analysts say even the updated average estimate may be too optimistic.
"I think the numbers will be below 400,000 and maybe below 350,000," said Thomas Martin, a senior portfolio manager at Globalt Investments, a Tesla shareholder.
Deutsche Bank analysts expect between 340,000 and 350,000 cars to be delivered.
The company and Musk did not respond to requests for comment.
Data from automobile associations and analysts' estimates show a sharp drop in Tesla sales in the first two months of the year in the U.S., Europe and China.
In addition to the ailing economy, which has reduced people's appetite for big purchases, demand for Tesla cars has also been affected as some potential customers have been waiting for an updated version of the best-selling Model Y.
Late last month, Tesla began selling the refreshed Model Y, which now comes with full-size headlights and taillights, a rear-seat touchscreen and an upgraded interior, in China and this month in the U.S. and Europe.
"The refreshed Model Y may increase demand, but it may extend a bit as many customers may be waiting for the launch of a more affordable vehicle," said David Wagner, head of equity and portfolio at Aptus Capital Advisors.
Tesla has said it will launch a more affordable model this year based on existing platforms, but offered no details.
Demand for Tesla's Cybertruck pickup, which was released in late 2023 after several delays, has also been tepid, with its polarizing trapezoidal design and higher-than-promised price keeping buyers away. This month, Tesla recalled nearly all Cybertrucks in the U.S. to fix an external panel that can detach while in motion.
The company is offering rebates and other incentives, including cheap financing.
But they appear to have had little impact in Europe, where sales were down in the first two months of the year. People have backed away from Musk's support for right-wing policies.
Sales of Tesla, made in China, also fell. Chinese rivals, including BYD, have stepped up the price war and launched at least six models in the past year to counter the Model Y.
The "Tesla takedown" protests in countries such as Germany and Finland have intensified criticism of Musk in the U.S., where he has contributed to the downsizing of the federal workforce and the ending of humanitarian initiatives.
Tesla cars have been set on fire in Las Vegas and incidents of vandalism at Tesla stores have increased. Trump announced that committing violence against Tesla dealers would be declared domestic terrorism.
Tesla is likely to be less affected than its competitors by Trump's recent 25 percent tariffs on imported vehicles and parts. Tesla imports fewer parts than other automakers outside the U.S. and manufactures domestically all the vehicles it sells in the U.S.
However, Musk says the cost impact of the tariffs will not be negligible. Tesla has also warned that it is at risk of retaliatory tariffs that could be imposed in response to Trump's levies. | BGNES
