Tesla is at a critical juncture as new evidence mounts of weakening global demand for its electric vehicles. The company is facing a wave of headwinds, not the least of which is a not-so-quiet consumer backlash against its chief executive, Elon Musk. Analysts have been lowering their forecasts, citing concerns over Musk’s involvement in the Trump administration and its potential impact on Tesla’s brand.
Dan Ives, managing director at Wedbush Securities, has predicted that Tesla’s coming deliveries will be between 355,000 and 360,000. That perhaps explains this projection, which sees November passenger numbers 7% down compared to the same period last year. It is well below Wall Street’s early forecast of 400,000. The sharp drop in the company’s expected deliveries further illustrates the hurdles the EV maker needs to clear to stay on its ambitious growth path.
Analysts blame a large part of that projected drop on advertising reputation risk tied to Elon Musk. Matthias Schmidt, a Berlin-based electric car analyst, noted that what Musk is doing is scaring away Tesla’s liberal consumer base.
“He has become the core toxic issue behind the disintegration of the brand and should step-aside before it explodes like one of his rockets,” Schmidt remarked.
Beyond these brand challenges, Tesla is facing the repercussions of tariffs levied by the US government on imported components as well. Despite having American-made vehicles, the company imports significant portions of their supply. It’ll notice the bite of a 25% tariff on foreign-built cars. Elon Musk recently admitted that tariffs are the biggest threat to Tesla’s continued operation.
“The tariff impact on Tesla is still significant,” Musk stated.
As Dan Ives, tech analyst for Wed Bush Securities, warned, these tariffs have the potential to throw the entire global auto industry into “complete chaos.” The upcoming tariffs represent a serious threat to Tesla. They do affect its global cost structure, including vehicles produced in the US for the US market.
President Donald Trump had first announced the tariffs. He believes this step will encourage foreign auto manufacturers to start increasing their price points and it will encourage consumers to buy American-made cars as a result.
“People are gonna buy American-made cars. We have plenty,” Trump told NBC News.
Adding to the trouble for Tesla is a demographic change among its consumers. Market research firm Strategic Vision reported a decline in Tesla’s Democrat owner group from 40% during the Biden administration to 29% currently. This strategic pivot comes amid growing worries about the company’s overall brand equity, or lack thereof, since Musk has taken charge.