The effects of Tesla’s (TSLA) “unprecedented” brand damage have surprised even analysts at J.P. Morgan (JPM), who had already described the backlash against CEO Elon Musk as without equal in the history of the automotive industry.
“Tesla’s 1Q sales and production report causes us to think that — if anything — we may have underestimated the degree of consumer reaction,” analysts led by Ryan Brinkman said in a Friday note.
Tesla has become an easy target for protesters angered by Musk’s support of President Donald Trump and Musk’s work in the federal government leading the Department of Government Efficiency (DOGE). Nonviolent, anti-Tesla protests have been held across the U.S. and other countries, while vandalism against the company’s customers and facilities has ramped up.
Austin, Texas-based Tesla delivered 336,681 electric vehicles between January and March, well below Wall Street’s lowered expectations; J.P. Morgan, for example, had a 355,041-unit forecast, which was below the consensus. This period marked Tesla’s worst quarterly sales performance since 2022 and its poorest compared to Wall Street’s consensus.
Deepwater Asset Management’s Gene Munster, a Tesla bull, estimates that Tesla lost about 80,000 deliveries as a result of brand damage. Fellow bull, Wedbush Securities analyst Dan Ives, called the sales report a “disaster on every metric” and said there’s no debate as to whether Musk’s politics are hurting Tesla.
Brinkman’s team notes that the last time deliveries fell short by a similar degree, in the first quarter of 2024, sales fell by 10% below expectations. Several analysts have lowered their full-year sales expectations for Tesla by tens of thousands of vehicles.
“We see risk to deliveries and earnings expectations for every quarter going forward,” the J.P. Morgan analysts wrote. That will be especially true in the April to June quarter, as Tesla’s sales and brand equity “appear to be losing rather than gaining momentum.”
J.P. Morgan expects first-quarter earnings per share of 36 cents, compared with its earlier 40 cents per share estimate and Wall Street’s 46 cents per share consensus. Full-year earnings are forecast to come in at $2.30 per share, down from an earlier forecast that called for $2.35 per share and the $2.70 per share consensus. Brinkman expects second-quarter sales to reach 404,000, down from 462,890 last year.
Tesla shares have slid about 30% this year as of the market’s close Thursday, largely due to the backlash against Musk. After a report confirmed that Musk would be leaving his official government job by June at the latest (due to the nature of his employee designation), the stock soared. He’s expected to stay on as a “friend and advisor” to the White House after his official departure, according to Vice President J.D. Vance.
Tesla’s stock dropped 5% in pre-market trading Friday as the broader market continued to decline on the back of Trump’s new tariffs. The U.S.’ 25% tariffs on foreign vehicles — and later, vehicle parts — will affect Tesla, according to Musk and chief financial officer Vaibhav Taneja.
In a recent letter to the U.S. Trade Representative (USTR), Tesla said that even with “aggressive” localization of the supply chain, some parts are “difficult or impossible” to source domestically. Between 60% and 75% of the parts used in Tesla’s electric vehicles are made in the U.S., although that varies by model.