Tesla's quarterly deliveries have taken a significant hit, with the electric vehicle (EV) manufacturer reporting 336,681 deliveries, its worst performance in more than two years. The decline is attributed to the growing backlash against CEO Elon Musk's political maneuverings, which have sparked controversy and affected sales.

The dip in sales comes as Musk continues to lead DOGE, an "advisory body" that has been involved in laying off thousands of federal employees and attempting to eliminate entire agencies and programs. Musk's involvement in the government has not only proven controversial but also unpopular, leading many to wonder what effect it might have on Tesla's sales. Even one of Tesla's top supporters on Wall Street recently urged Musk to focus less on politics and more on running his businesses.

Tesla's production numbers also took a hit, with 362,615 units produced, down from previous periods. The automaker attributed the decline to the switching of its production lines for the new Model Y refresh. Analysts had expected Tesla to report deliveries of 408,000 EVs for the period of January to March, according to FactSet. However, several analysts downgraded their expectations to below 400,000 in recent weeks, citing the "Tesla Takedown" protests and falling international sales.

Sales in Europe and China, two of Tesla's key markets, have fallen significantly in the first quarter. In Europe, sales tumbled 49% year-over-year, despite overall EV sales growing, according to the European Automobile Manufacturer's Association. In Germany, one of Tesla's largest EU markets, sales plummeted 76% to just 1,429 units in February, compared to 6,038 in 2024. The decline follows Musk's endorsement of Germany's far-right AfD party in last month's national election.

The trend has continued throughout Europe in March, with early data from some countries showing a significant decline in Tesla sales. For example, French trade association PFA reported 3,159 Tesla deliveries last month, down 37% from March 2024 and down 41% for the quarter. Similarly, in Sweden, Tesla sales fell 64% in March. Despite the decline, new EV sales in Europe grew by 28.4%, capturing 15.2% of the total EU market share, even as overall new car registrations fell.

In China, another key market for Tesla, sales of its Shanghai-made cars fell in March amid increased competition from BYD, which surpassed Tesla on revenue in 2024, and other local players like Geely. Tesla sold 78,828 EVs in China in March, down 11.5% year-over-year, according to data from the China Passenger Car Association. However, this is up from the 30,688 cars sold in February.

Tesla has had a rough start to the year, with its stock hitting its lowest performance since 2022 amid mounting pressures, increased backlash against Musk, and an aging lineup. Despite the popularity of the Cybertruck, it hasn't been enough to boost Tesla's sales numbers. The company is likely hoping that its refreshed Model Y and other potential upgrades coming this year will help turn things around. Earlier this week, Tesla began offering 0% financing on the refreshed Model Y range in China, and the company has also teased mysterious new lower-cost models that it has yet to reveal.

The decline in Tesla's sales and deliveries is a significant blow to the company, which has been struggling to maintain its market dominance in the face of increasing competition. As the EV market continues to evolve, Tesla will need to find ways to address the backlash against Musk and revamp its strategy to stay ahead of the competition.