Bad News For Elon Musk—Q1 Has Worrisome Returns For Tesla's Cybertruck

Forbes

Sales of Elon Musk’s chunky truck in the year’s first three months were less than half of what it delivered in Q3 and Q4 of last year, according to Cox Automotive.  Read the full story on Forbes: https://www.forbes.com/sites/alanohnsman/2025/04/10/tesla-cybertruck-sales-saw-a-sharp-dive-in-the-first-quarter/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  0:00 Introduction 1:45 Q1 Tesla Cybertruck- Trouble Arises 5:40 Dip In EV Consumers For Tesla 14:14 What Do Tariffs Look Like For Elon Musk & Tesla 18:24 Is Tesla Fall Permanent Or Temporary?  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Hi, everybody. I'm Brittany Lewis, a reporter here at Forbes. Joining me now is Alan Onsman,

00:08Forbes Senior Editor and author of The Current Climate Newsletter. Alan, thanks so much for

00:12joining me. Hi, Brittany. Good to be with you. Alan, you and I talked at the end of March and

00:18you said things are bad at Tesla. They're about to get much worse. And I think you've really

00:22foreshadowed our current conversation today because you have some news about Tesla Cybertruck

00:27sales in the first quarter of 2025. And they really took a tumble. Talk to us about it. What do you

00:33know? Yeah, well, there were indications a few weeks ago that they weren't going great for that

00:39particular model. And as it turns out, that was exactly correct. They just cratered in the first

00:46quarter down over 50 percent. Normally, we'd want to do a year over year comparison. But in this case,

00:52Cybertruck was only launched in the final month of 2023, and they had a very slow ramp up. So

01:00the numbers were definitely up from Q1 of 2024 because it was a very easy comparison. But by Q2,

01:08three and four of last year, volume had really jumped up. And what we saw was it in Q1 of this year,

01:15Cybertruck sales were less than half of what they were in either Q3 or Q4 of last year. And they were

01:22also below the Q2 numbers. So what that tells us is a very new model you typically expect to see from

01:29any automaker, it's going up like this, you know, from launch, it's an upward trajectory. This is not

01:35directionally the way you would see a vehicle that's little more than a year on the market

01:40already being down so much. So that is a very, very negative sign.

01:44So you said slow ramp up, and now we're already back down in Q1 of this year, below Q3 and Q4 of

01:532024. Is there any indication as to why you're seeing this? I mean, is it a bad product or is

01:58it something else? Well, given the number of recalls that have been associated with this model,

02:06one could say this has been a bad product. It really got hammered, especially in March by a

02:13very embarrassing recall, in which these stainless steel body panels were literally falling off

02:19because they weren't glued on properly. That's kind of an embarrassing thing for a vehicle that

02:25Elon sold as indestructible and bulletproof and, you know, all sorts of, you know, extreme

02:32language to promote it. And it turns out that, you know, when the body panels aren't staying on,

02:38that's not great, you know, for a product generally. And then we're also, you know,

02:43there are also other reports within the market that the company is just sitting on a lot of

02:47unsold inventory right now, at least 2,400 units that are just sitting there with nowhere to go,

02:54no buyers. So that's not a good sign for this particular model.

02:59Alan, there really seems to be an appetite for electric vehicles, just not Cybertrucks. And I

03:04want to read a stat that you sent me yesterday. You said that Tesla's U.S. sales fell about 9%

03:10in Q1, while EV sales in the U.S. grew 11%. Can you expand on that?

03:16Yeah, there definitely is demand for electric vehicles. You know, the current administration's

03:22not a big fan of them, but people do tend to like them, especially if you've got access to

03:27charging, maybe at home or in your neighborhood. And what we saw was that across the industry,

03:33the segment was up very robustly, 11% gain overall. That was actually a little bit, I think,

03:40in line with or above the overall industry rate for new vehicles. Part of that was there was a rush to

03:46buy in Q1 because people don't know what's going to happen because of prices going forward,

03:51and also whether or not federal tax credits will stay available. The Trump administration has said

03:57they're going to get rid of the $7,500 federal tax credit. However, it is actually still available

04:04at this time. So anyone who was sort of thinking, I'd like to have an electric vehicle, it seems that

04:10in most cases, they went ahead and said, let's get it now. And so we did see a very robust market.

04:16One of the real standouts actually was General Motors, which more than doubled its volume in Q1.

04:25It has this new electric Equinox, a small crossover SUV. It's pretty affordable,

04:31starts in the high 30,000s. You can get a well-contented one for about $40,000. That's a

04:37pretty decent price. And then if you're able to bake in a $7,500 tax credit on it, that's a good deal.

04:44So Honda, which didn't really have anything a year ago, suddenly had a lot of EVs to sell

04:50in Q1. So there was a lot of activity in the industry. And there are a lot of models out there.

04:59You know, Tesla, clearly there is some indication that consumers are moving away from the brand.

05:06And it's being reflected with their dollars and what they're buying. We did see about a 9% drop

05:15over the quarter for Tesla across the board. Cybertruck obviously took a big hit, but Cybertruck

05:22is not a huge volume model. Their real volume comes from the Model Y electric crossover and the Model 3.

05:28And those were both down as well. So that really went against the grain, where you did see general

05:35enthusiasm from consumers for electric vehicles broadly, just not for Tesla.

05:40You and I have talked about this Venn diagram before, where Elon Musk's politics and traditional

05:47EV customers, there is not a lot of overlap there. So how much of Tesla's branding problem do you think

05:54contributed to this Cybertruck dip? It's clearly an issue. And I think Cybertruck,

06:01you know, it's been a controversial product since it was unveiled. Most people who get into an electric

06:08vehicle do so because they're thinking, I don't want to buy gasoline. I'm thinking about my environmental

06:14impact. It's hard to make an argument with Cybertruck in particular. It's a very large, heavy

06:22vehicle. It weighs 7,000 pounds. It's very expensive. It takes, you know, it's got a big

06:28battery in it. So it's very resource intensive. And the design with this very hard edge design that

06:36Tesla decided to go with, it's kind of aggressive in a way that doesn't necessarily say I care about

06:42the environment. It's really more kind of a, you know, maybe it reflects someone's personality.

06:46That doesn't seem to have broad appeal. There is a segment of buyers that do seem to like it,

06:54but it doesn't really appeal to a broad buyer base. And where you are seeing more volume does

07:00tend to be on midsize and smaller and somewhat more affordable EVs, whether it's the Kia and Hyundai

07:07models, as we said, I've mentioned earlier with General Motors, with its new Equinox,

07:11which really seems to be resonating well, both in terms of pricing, design, size, all of those

07:18things that really better aligns with where most EV buyers, you know, want to be. It's, you know,

07:25it was a very risky move on Tesla's part to bring out a vehicle like Cybertruck. And as reported

07:30earlier, as one, you know, market analyst pointed out, it was a big swing and a big miss.

07:34It doesn't really seem from your reporting that the risk is paying off. And if all EV sales were down

07:40in the U.S., I think it would be easy for Tesla to shrug this off and say, hey, you know, this is

07:45the trend and we're following the trend here. But that is not the case. Tesla has a unique problem

07:51here. Has Elon Musk weighed in on this at all? No, not that I'm aware of. There's no real effort

08:01to dial back, you know, his public behavior. I would say the last week or so, he's been a little

08:09bit lower key, less out in front. But there's really been no major, major shift. And, you know,

08:18this isn't limited to the United States. What we saw, you know, Tesla's quarterly numbers globally

08:23were bad, where it was down over five percent year over year worldwide. Europe is particularly

08:31a difficult market for the company right now. And we just have reports to, you know, out today

08:37on Forbes about protests and attacks on Tesla vehicles in the U.K., yet another market. We've

08:42seen Germany going really south on Tesla. France, many of these markets that just want nothing to do

08:49with the brand. And that could well be permanent damage. So in the case of Cybertruck, that's only

08:56a U.S. vehicle. It's too large to be sold in the European market. It doesn't comply with

09:03pedestrian safety rules in the EU. It's not sold in China. It's not sold in Japan. Like there are no

09:10export markets currently for Cybertruck. So what they sell in the U.S. is that that's the only market

09:15for it. Models like the Model 3 and the Model Y have had good global appeal up to this point.

09:20But we're seeing, you know, big markets really sour on, you know, on Tesla. And it's all driven

09:27by Elon entirely at this point because they don't appreciate maybe his politics and his public views.

09:35This is a this is a real problem for the brand. When you see a dip in sales like this, and we're

09:41Forbes, we've covered businesses time and time again, there would be serious talks about a shake

09:46up in leadership. You and I have talked about how Elon Musk is an absentee CEO when it comes to Tesla.

09:53There was no indication that he was going to be ousted because there's no one. There's a lot of

09:57buffer zone between him and the next in line for leadership. Are these sales going to change those

10:04conversations at all? Only only the board knows that. I mean, I would love to be a fly on the wall and

10:10hear the conversations going on there. There have been no public statements from the company,

10:15no indication of any change, of course, whatsoever. You know, in a different world, you might see

10:23Elon on his own announce that he was stepping aside or the board taking action. There's no indication

10:29here that that that's in the cards. And, you know, we'll see how this plays out. But but it's it's

10:36it's definitely a big risk. Aside from this Q1 bad news for Cybertrucks,

10:41what else is on your radar when it comes to Tesla? Is there any other bad news,

10:45any perhaps silver lining? What's on your radar? Well, you know, we saw today also that in China,

10:55Tesla was down in China in Q1, but they're taking a further step where they're

11:01now halting exports of the Model S and the Model X SUV. Those are built in California.

11:08They're the top end premium models from Tesla. Shipments of those to China have been curtailed.

11:13And that's entirely because of the of the tariff situation where their price is essentially doubled

11:20now in the Chinese market. And understandably, there's not going to be a lot of demand for a

11:25product that that suddenly costs twice as much because they're very expensive vehicles in that

11:30market. The watching how things unfold in China remains sort of top of mind for me, for Tesla and

11:40and really for all automakers, but especially Tesla. The Chinese have a massive price advantage that's

11:46only going to increase now because of the tariff situation and the ability for companies like Tesla

11:52to compete in that market with domestic Chinese manufacturers. It's it's getting ever more

11:58challenging. And the tariffs have only made that more difficult back here in the in the domestic

12:03market in the U.S., trying to understand and see the implications of the tariffs. There's an expectation

12:09that every vehicle manufacturer is going to have to raise prices by thousands of dollars. In some cases,

12:16you know, General Motors, Ford, Stellantis, they have imported vehicles that they're building in Mexico,

12:22Canada or other markets that they're bringing in. Tesla, to its credit, has no imported vehicles

12:28whatsoever. But it does use steel, aluminum, Japanese auto parts, electronics, all sorts of

12:36materials that come from abroad. So it's going to take a hit from the tariffs as well. So seeing in the

12:42coming months in Q2 what the full impact of the Trump tariffs remains both confusing, but it's probably

12:50going to be very negative across the board for Tesla, but for the entire industry, I think also to watch

12:58and see both in the automotive space and in manufacturing generally. I was speaking with a board member from

13:04a company that, you know, will remain anonymous here. But he was mentioning after a board meeting this week,

13:10there's going to be a major chilling effect on investment in new plants and equipment because

13:17of the tariffs and because of the unknown unpredictability of U.S. trade policy under the

13:24Trump administration that that big projects, multi-billion projects are not going to move

13:29forward because manufacturers don't know what the rules are. They don't know what the circumstances are

13:33going to be for bets that they're making like multi-year bets. So a lot of folks are going to just sit

13:40tight. They're going to hold off on major investments and that's going to have a chilling effect on

13:44manufacturing, which is ironic because the claimed reason for the trade tariffs is to build up domestic

13:51manufacturing. But if you actually talk to domestic manufacturers, they're not willing to commit

13:58resources right now because it's an unknowable future. They, you know, when people don't know

14:04what the policy will be a month from now, two months from now, let alone a year from now,

14:08they're just going to sit tight and say, we're going to, we're going to see how this shakes out.

14:11We're not going to move forward right now. And Elon Musk was one of the Trump supporters

14:16who posted out against the tariffs. And I am curious, are the auto tariffs going to hit Tesla

14:23harder than the, the industry at large, or is the blow going to be a little bit softer? I mean,

14:28what does that look like? It's, it's a little bit softer for them again, because they are more,

14:35more everything that they sell in the United States, they produce in the United States.

14:39So that in terms of the finished product, again, it's really more for them, the inputs,

14:43some of the raw, you know, the materials, raw materials, parts, electronics that they need,

14:48metals, those come from all over the place. And, and so that's, they're going to take a hit there.

14:55I'm waiting to also understand, they had a very interesting project that they had announced

14:59with CATL. It's a Chinese battery maker. It's the world's largest battery maker at this point. It's

15:05a giant. They had a big plan to work with CATL at, at the Tesla Gigafactory in Nevada to bring in

15:13what's called LFP batteries. These are lithium iron phosphate batteries. They're very popular in the

15:19Chinese market. They have some benefits. They're very low cost. They don't burn. So if there's an

15:25accident, you don't get fires from LFP batteries the way you do with a lithium ion battery. That

15:30project, I don't know how that possibly moves forward right now, because partnering with a

15:36Chinese battery supplier in the United States, that's just not going to fly under current Trump

15:43tariff rules. And as that trade war with China is escalating really by the day, I know we spoke in

15:51March. Things are bad at Tesla. They're about to get much worse. Where are we, would you say,

15:57in this much worse area? Is Tesla going to get to the point where there's no return? Or do you think

16:03that this is more of a blip in the road for the company? I don't think it's a blip. And I wouldn't

16:09say it's the point of no return. It's somewhere in between that. I think there had been expectations

16:16that this year, beginning in the second half, Tesla could see a rebound because of plans to bring out

16:24lower, lower price derivatives of their existing models. So maybe a cheaper Model 3, a cheaper Model

16:31Y. Well, that's impossible to do right now because all of the costs, their costs are going up.

16:38The battery project with CATL, for example, would have perhaps allowed Tesla to have a cheaper,

16:45lower cost battery pack that might be thousands of dollars less. That would allow them to cut the

16:50price of their top selling models. Well, if that project's not happening, I don't know how

16:56they shave off $5,000 or $10,000 off the purchase price, especially if steel costs more, if aluminum

17:02costs more, if Japanese auto parts cost more, if Korean auto parts cost more. So it's bad. It's going to

17:10stay bad for a while. Previously, many of the issues were self-inflicted by the company because of

17:20perhaps poor decisions by Elon and the failure of the board to be more forceful in setting guidelines,

17:28governing his behavior. Now we have, with the tariffs really beginning to bite, that adds a

17:33different layer of pain that will be felt across the industry. But that kind of complicates the

17:40problems that Tesla was already having. So if you look at Tesla versus the other automakers,

17:47on one level, they're less hurt by the tariffs than others. However, they have this growing brand

17:54problem that the others don't have. So to say that Tesla is in a good position relative to the rest of

18:00the auto industry, I think is not a correct belief in this case. I think they have different problems

18:08that other automakers don't have. But yeah, it's not going to be a good year for the company.

18:16And if you were expecting a rebound in the second half, right now, my sense is you're going to be very

18:22disappointed. It's really interesting to see the evolution of Elon Musk. And you've been covering

18:28this now for years where he was seen as this real genius in the tech space. And then in the span of

18:35months, he's really been seen as President Trump's right hand man, number one MAGA supporter here.

18:41Do you think that this branding problem for Tesla is permanent or do you think it's more temporary?

18:46Well, I mean, if something dramatic were to happen, if he were to announce he's stepping aside and he

18:54will have no active management role and the company suddenly brought in a fresh face with a different

19:01style, you could probably fix a lot of the damage and maybe put the company on a new trajectory.

19:09Right now, I don't see how things reverse in the near term or even the midterm unless there is a

19:22major change at the top, honestly. It's just a simple rule of business. Keep your personal politics

19:30and a lot of your personal views out of it. You want to sell to everybody. Try not to alienate buyer

19:35groups and especially don't alienate your core buyer base, which in this case turns out to be

19:41people who tend to identify as Democrat or more liberal, who actually are the biggest EV buyers,

19:47especially in California and the West Coast states and in the East Coast. Maybe don't anger or turn off

19:58those customers with your political and views on social issues, for example. And we see as a general

20:05rule that very few companies, very few CEOs actually actively aggravate their core buyer base. But

20:11unfortunately, that's that's exactly what seems to have happened at Tesla. If that continues,

20:16then the future looks looks bleak, unfortunately. And a lot of goodwill of the company built up just

20:22evaporates. I mean, I do think that's the biggest piece of business advice. If you're the CEO,

20:28don't annoy your number one customers. Alan Ownsman, we will leave it there. There is so much news coming

20:34out from Elon Musk, Tesla, everything in between. So I'm excited to keep talking with you about it.

20:40Thanks for joining me. Thanks, Brittany. Great to be with you.

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