Tesla's Long-Term Potential Still Strong, But Musk Must End the Political Firestorm First

Tesla (NASDAQ:TSLA) shares tanked as much as 8% during premarket hours on Thursday to £197.46 ($260.10) apiece after Q1 deliveries significantly missed consensus estimates.

The EV maker reported 336,681 deliveries for Q1 2025, well below the Street's estimate of 352,000. Tesla attributed the grim numbers to weeks of lost production during the quarter amid the ramp of its new Model Y across all production factories. Demand for Tesla EVs faltered in Europe, followed by the US and China as new registrations nosedived. Furthermore, the redesigned Model Y upgrade will be implemented in phases and is yet to lift sales.

Elsewhere, Warren Buffett-backed BYD became the best-selling EV maker globally after reporting 416,388 EV sales in Q1.

While the Model Y refresh is one reason for the slump in deliveries, existing and potential Tesla customers are looking for other options due to Musk's political posture. Analysts are concerned that the Tesla brand crisis could lead to darker days for the company if Musk doesn't balance his roles as CEO and the chief of the US Department of Government Efficiency (DOGE).

Wedbush Says Q1 Results Were a Disaster

Renowned Wedbush analyst and Tesla bull Dan Ives noted in a recent report that Tesla's Q1 results were a 'disaster on every metric.'

He explained that Wall Street had an idea that Q1 results would miss estimates, but the actual figures were 'worse than expected.'

Ives added that the time has come for Musk to choose between Tesla and DOGE because the more political he gets with his government role, the more Tesla suffers. 'It's a fork in the road moment... there is no debate,' he noted.

The analyst continued that Q1 results were an example of the damage Musk is causing Tesla, and it's a moment of truth for the CEO 'to navigate this brand tornado crisis moment and get onto the other side of this dark chapter for Tesla with much better days ahead.'

Wedbush is bullish on Tesla's growth story and its potential to lead the autonomous market worldwide with the launch of unsupervised FSD. However, Musk must halt the ongoing 'political firestorm' and balance responsibilities with DOGE and Tesla.

'The future is so bright, but this is a full-blown crisis Tesla is navigating now, and it's primarily self-inflicted. We remain firmly bullish on the long-term Tesla story, but Musk needs to get his act together or else unfortunately darker times are ahead for Tesla,' Ives concluded.

Musk Shuns Reports of Stepping Down from DOGE

Reports from news outlets, including Politico, emerged that Musk and US President Donald Trump are discussing the possibility of the CEO stepping back from DOGE to focus on his private companies. This news development lifted Tesla stocks markedly after a sharp decline as investors viewed it as positive news for the EV maker.

However, White House press secretary Karoline Leavitt labelled the reports as 'garbage' on X, formerly Twitter, and Musk concurred with her in another post, stating that it is 'fake news.' This could further build selling pressure on the Tesla stock and justify the sharp decline during premarket hours today.

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