Tesla Inc. experienced a turbulent day on April 2, 2025, as its shares initially plummeted more than 4% following the release of disappointing first-quarter vehicle delivery numbers. However, the electric vehicle giant's stock made a notable recovery, ultimately closing up over 5% for the session. This rebound was attributed to a classic 'sell the rumor, buy the news' market reaction, coupled with a Politico report suggesting that CEO Elon Musk might step down from his government role in the near future.
According to the report, U.S. President Donald Trump had informed his inner circle that Musk would be stepping back in the coming weeks. However, this claim was swiftly dismissed by White House Press Secretary Karoline Leavitt, who labeled the report "garbage." She emphasized that both Musk and Trump had publicly stated that Elon would depart from public service as a special government employee only after completing his significant work at the Department of Government Efficiency (DOGE).
Tesla's first-quarter vehicle deliveries totaled 336,681, which fell short of the Bloomberg forecast of 390,000. The company also reported production numbers of 362,615 units for the same period. The shortfall was primarily attributed to manufacturing disruptions related to the refresh of the Model Y, as indicated in a company press release. Deliveries of the Model 3 and Model Y, which are critical to Tesla’s sales, reached 323,800 units, while other models, including the Model S and Model X, accounted for 12,881 deliveries.
Analysts reacted to the delivery numbers with a mix of concern and cautious optimism. Vital Knowledge analysts noted that while the 336,681 figure isn’t shockingly bad given the low expectations for the quarter, it's still a grim sign for the company, particularly as the main challenges facing Tesla's auto business—slumping demand in key markets, trade tensions, and Musk's political controversies—remain unresolved.
Conversely, analysts at Canaccord suggested that it was premature to assess the potential impact on Tesla's brand from recent events, stating, "We don’t think this is the quarter where one can accurately assess any potential Tesla brand impact from recent events." However, Wedbush analysts took a more pessimistic view, asserting that the ongoing brand crisis is undeniably affecting Tesla's performance. They emphasized, "Musk needs to stop this political firestorm and balance being CEO of Tesla with DOGE." They warned that while the long-term outlook for Tesla remains bright, the company faces a significant crisis that is largely self-inflicted.
In a related development, New Street Research analyst Pierre Ferragu defended his position that negative publicity surrounding Musk would not have a lasting impact on Tesla's sales in the medium term. He pointed out that despite significant drops in Tesla's brand perception during 2022—most notably a 21-point decline in March and a 17-point drop in November coinciding with Musk's Twitter acquisition—the company's quarterly deliveries had steadily increased from 185,000 in the first quarter of 2021 to 485,000 by the fourth quarter of 2023.
Ferragu’s optimistic outlook comes at a time when Tesla is grappling with various challenges. The company reported approximately 337,000 vehicle deliveries in the first quarter of 2025, which disappointed analysts across all major markets. This led Wedbush analyst Dan Ives to describe the figures as "a disaster for the bulls," although he maintained an Outperform rating with a $550 price target. Ives noted, "The more political he gets with DOGE, the more the brand suffers; there is no debate."
As the day progressed, Tesla's stock rebounded significantly, closing at $282.76, reflecting a gain of 5.33% for the day. However, in after-hours trading, the stock dipped 8.01% to $260.12 following Musk's dismissal of the Politico report as "fake news" on X, the platform formerly known as Twitter.
Amid these fluctuations, Tesla's stock has fallen as much as 33% since Trump's inauguration in January 2025. Analysts have attributed a portion of this decline to Musk's political activities, which include a reported $20 million investment aimed at defeating a Wisconsin Supreme Court candidate and endorsements of far-right parties in Europe.
Despite these challenges, Tesla's stock continues to outperform rivals such as Nio Inc. and Lucid Group Inc., although it lags behind Rivian Automotive Inc. in both short- and long-term price trends. As Tesla prepares to report its full first-quarter financial results on April 22, 2025, investors and analysts alike are keenly watching how the company navigates the ongoing turbulence surrounding its leadership and market position.
