Tesla’s sales fell 13% in Q1 2023, marking the largest decline in the company’s history, with 336,681 vehicles delivered—50,000 fewer than last year. This drop is attributed to backlash against CEO Elon Musk and increased competition, particularly from Chinese automaker BYD. Protests against Musk’s political involvement and vandalism of Tesla facilities have deterred potential buyers. Analysts express concern over Musk’s negative impact on the brand, with Tesla’s stock losing 44% of its value since December. Growing competition in the EV market, especially in Europe and China, poses additional challenges for Tesla moving forward.
CNN
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Tesla’s sales dropped by 13% in the first quarter of this year, marking the largest delivery decline in its history as criticisms against CEO Elon Musk and increasing competition significantly impacted the demand for its electric vehicles.
On Wednesday, Tesla announced it delivered 336,681 vehicles during the quarter, which is 50,000 fewer than in the same period last year, constituting the company’s lowest sales figures in nearly three years.
The company has seen protests outside its showrooms from critics opposing Musk’s role as the head of Government Efficiency and his alignment with Donald Trump’s policies. Incidents of vandalism against Tesla facilities, including charging stations and some vehicles, may have also deterred potential buyers from making purchases.
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Tesla did not address the protests in its sales announcement but cited a production halt across all factories for several weeks during the quarter due to an update on the Model Y.
“Thank you to all our customers, employees, suppliers, shareholders and supporters who helped us achieve these results,” the company stated.
The significant decline is surprising for a company that has been reporting annual sales growth between 20% and 100% in nearly every quarter until now, which was a key factor in its high stock valuation. Tesla only experienced its first minimal drop in quarterly sales during the pandemic in 2020, when production and deliveries were affected by shutdowns.
However, last year Tesla recorded its first annual sales decline, which has now intensified this quarter. The drop was worse than predicted by Tesla analysts, who had expected quarterly sales to be at least 350,000.
Shares of Tesla, which nearly doubled in price after the last presidential election due to optimism around Musk’s connections with Trump, have fallen 44% since reaching an all-time high in December. Despite a slight 2% dip in trading following the sales report, shares rebounded sharply after Politico reported that Musk may reduce his formal involvement in the Trump administration while remaining as an informal advisor.
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Analysts are increasingly concerned that Musk’s actions in other areas are adversely impacting Tesla.
“We anticipated a challenging first quarter, but the results were even worse than we feared,” stated Dan Ives from Wedbush Securities, a long-time supporter of Tesla, in a note to clients. “This quarter highlights the impact Musk is having on Tesla. It is a critical juncture for Musk to steer this brand tornado crisis toward a better outcome and emerge from this dark period for Tesla.”
With his high-profile, confrontational remarks and social media presence, Musk has become a focal point for criticism aimed at the Trump administration’s policies.
A recent CNN survey indicated that only 35% of Americans hold a favorable opinion of Musk, while 53% view him negatively, making him more widely known and notably less popular than Vice President JD Vance (who has a 33% favorable and 44% unfavorable rating).
Negative perceptions of Musk are transferring to Tesla, especially among individuals who identify as liberals—a demographic most inclined to buy electric vehicles.
Polling suggests Tesla is losing appeal. A February survey by Morning Consult revealed that about 32% of U.S. consumers “would not consider” purchasing a Tesla, up from 27% the previous year, and from 17% in 2021.
S&P Global Mobility, which tracks state-by-state sales, reported a significant shift in customer loyalty between traditionally “blue states”—that voted Democratic in the last four presidential elections—and “red states”—which supported Republicans.
In blue states, the percentage of existing Tesla owners looking to purchase another Tesla dropped to 65% by the end of 2024, down from 72% the previous year. Conversely, repeat Tesla buyers in red states increased slightly from 47.6% to 48.2% during the same timeframe.
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Tesla does not typically disclose sales data by market, but reports indicate a 49% drop in sales in Europe during the first two months of the last quarter, despite an overall 28% increase in EV sales across the continent.
This decline may be attributed to negative sentiments towards Musk in Europe, where he has openly backed far-right political parties in countries like Germany and the UK.
Additionally, Tesla is encountering growing competition from other automakers, particularly those from China.
China represents the largest market for EVs and is Tesla’s second-largest market after the U.S. The Chinese manufacturer BYD reported sales of over 416,000 fully electric passenger vehicles last quarter, a 39% jump from the previous year, enabling it to once again surpass Tesla as the world’s top EV seller.
BYD has outpaced Tesla in EV sales multiple times over the past few quarters, even though Tesla has consistently led in annual sales. However, Tesla is on track to relinquish that title in 2025 if current sales patterns continue.
Generally, BYD’s vehicles are priced lower than Tesla’s and offer other benefits. Recently, BYD introduced a charging solution that claims to provide up to 250 miles of range after merely five minutes of charging.
Notwithstanding the fierce international competition, BYD and most other Chinese EV manufacturers are not present in the U.S. market.
This story has been updated with additional reporting and information.
CNN’s Ariel Edwards-Levy, Juliana Liu, Hassan Tayir, and John Liu contributed to this report.
Correction: An earlier version of this article mistakenly reported the extent of the decline in Tesla sales. The correct figure is a 13% drop last quarter.