Even Republicans are falling out of love with Tesla

Elon Musk is right to shift his focus back to carmaking

ANALYSIS | AGENCIES | “The future of Tesla is brighter than ever.” So declared Elon Musk during an earnings call on April. 22,2025. According to the carmaker’s boss, Tesla remains on course to become the world’s most valuable firm, worth as much as the next five companies combined, as it churns out fleets of autonomous taxis and legions of humanoid robots.

As Musk gazes into the future, investors remain transfixed by the car crash that is currently occurring at Tesla. Revenue from its electric vehicles (EVs) in the first quarter was down by a fifth, year on year. Operating profit fell by two-thirds. Far from racing ahead, Tesla’s market value has fallen by roughly half since peaking at around $1.5trn in December.

Earlier this month the company reported that it delivered just 337,000 vehicles in the quarter, 13% fewer than a year before and well below analysts’ expectations . In Europe, which makes up around a fifth of sales, registrations of new Teslas slid by 40%. In America, the carmaker’s biggest market, sales fell by almost 9%, even as those of all EVs rose by 11%.

Can Tesla recover?

Slumping sales partly reflect a backlash against the politics of Musk, who has lately refashioned himself into a right-wing activist and nemesis of America’s “deep state”. Tesla’s showrooms have faced protests and arson attacks since Musk took his chainsaw to the federal government as head of Donald Trump’s Department of Government Efficiency.

Some analysts had hoped that, at least in America, a boom in Tesla sales to right-wing consumers would balance out declining sales to left-wing ones. TD Cowen, an investment bank, recently estimated that although Musk’s political activities could cut sales by more than 100,000 vehicles a year in America’s Democrat-leaning counties, they could boost them by twice that in Republican-leaning ones.

That type of partisan rebalancing was on display last year as Musk completed his MAGA conversion. Our analysis, drawing on figures from S&P Global, a data provider, suggests that Tesla’s sales shrank in left-leaning cities in 2024 while growing in right-leaning ones. For example, in the San Francisco Bay Area, which favoured Kamala Harris in the presidential election by nearly three-to-one, sales fell by more than 16% last year; in Tampa, which favoured Trump by a wide margin, they rose by around 18%.

Unfortunately for Musk, though, even Republicans now appear to be spurning his EVs. Trends in the used-car market suggest that a growing number of Tesla owners in both blue and red states are putting them up for sale. Figures from MarketCheck, which tracks the inventories of more than 75,000 dealerships across America, show that listings of used Teslas have risen by two-thirds since the start of the year, twice as much as for other EVs (see chart 3). Listings for the Model 3 have increased by 63%; those for the Model Y have rocketed by 80%. The pattern can be seen in both left-leaning states, such as Massachusetts and New York, and right-leaning ones, such as Indiana and South Carolina.

That hints at a deeper problem for Tesla: stiffening competition. By contrast with its early years, when it was essentially unchallenged, the carmaker now faces serious threats from rivals such as General Motors (in America) and BYD (in China and elsewhere). It cannot afford a distracted boss. To investors’ relief, Musk announced during the earnings call that he would now be spending “far more” of his time away from Washington and at the company. They will be hoping he can speedily reverse Tesla out of its mess.

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Source: The Economists