Sign up for CleanTechnica’s Weekly Substack for Zach and Scott’s in-depth analyses and high level summaries, sign up for our daily newsletter, and/or follow us on Google News!
Last Updated on: 24th April 2025, 09:43 am
I started covering a potential drop in Tesla’s sales about a year and a half ago. That’s when Tesla started really pushing serious price cuts and providing significant extra features on a complimentary basis to new car buyers (including repeat Tesla customers). To me, this indicated Tesla may be facing consumer demand headwinds, a departure from the company’s decade or so of buyer demand outpacing Tesla’s production capacity.
Such discounts and bonuses have only increased since then, and we did eventually find out that Tesla demand was not as high as needed to keep sales growing, and much below what was expected and forecasted by CEO Elon Musk.
Nonetheless, some people still claim that Tesla has no demand problem whatsoever, and the reason for Tesla’s sales drop is all down to the Tesla Model Y refresh — which presumably lowered demand in 2024 as people waited for it and then hit especially hard in the 1st quarter of this year because of factory retooling to change over production from the old Model Y to the new one. As Tesla explained it in the 1st quarter report it just published this week: “In Q1, we accomplished an industry first: simultaneously changing over production lines across all factories for the world’s best-selling vehicle4 – the Model Y. The Tesla team successfully ramped our production lines across four factories while managing supply chains across three continents without any major disruptions, demonstrating the advancement of our operational and supply chain management capabilities.”
There’s no doubt that was a big change that involved some serious production pause, but also congratulations to the good work of countless people who made it happen as smoothly as it did. And … perhaps Musk or some other Tesla executives would have been a bit happy if it had involved more production pause, because something else in the quarterly report still reveals signs of consumer demand weakness and doesn’t really allow for the Model Y production revamp to be an excuse for dropping sales.
On page 6, Tesla has a line for “Global vehicle inventory (days of supply).” The figure in the first quarter of this year was 22. That compares to 12 days in the 4th quarter of 2024, 19 days in the 3rd quarter of 2024, 18 days in the 2nd quarter of 2024, and 28 days in the 1st quarter of 2024. In other words, it’s worse than the previous three quarters, and a bit better than the 1st quarter of last year, which also was not a good quarter.
Let’s tease this out a little bit for those not used to thinking about vehicle inventory. The point is that Tesla still has a lot of cars sitting and waiting to get bought, and it is taking longer to sell them than in previous quarters. You might argue that a lot of those cars were in transit in the 1st quarter. However, I don’t think that fully checks out, and Tesla doesn’t spend time on that argument.
Reportedly, the wait time for the new Tesla Model Y is already quite short in China, and Tesla made vague references to weaker demand in the quarterly report. “Uncertainty in the automotive and energy markets continues to increase as rapidly evolving trade policy adversely impacts the global supply chain and cost structure of Tesla and our peers. This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term,” Tesla wrote.
Notably, elsewhere, Tesla also referenced the increasing incentives for buyers when explaining why revenue and profitability were down. Here’s what it wrote as negatives for revenue and profitability:
– reduced vehicle average selling price (ASP) (excl. FX impact1), due to mix and sales incentives
– reduced vehicle ASP
We’ll see what comes in Q2, but, at the moment, it’s looking like Tesla does have a significant consumer demand problem and the production line changeovers for the new Model Y don’t adequately account for that.
Whether you have solar power or not, please complete our latest solar power survey.
Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.
Sign up for our daily newsletter for 15 new cleantech stories a day. Or sign up for our weekly one if daily is too frequent.
CleanTechnica uses affiliate links. See our policy here.
CleanTechnica’s Comment Policy