A Tesla car is charged at a station in Norheimsund, Norway. Tesla reported a 7-per-cent rise in auto sales on Thursday, reversing a series of declines in recent quarters.SERGEI GAPON/AFP/Getty Images
Six months after Elon Musk left the Trump administration to the great relief of Tesla investors worried about boycotts, the world’s richest man has announced some good news: Sales of Tesla cars are back.
Well, maybe.
The EV maker run by Musk reported Thursday that car sales jumped 7 per cent in the three months through September after plunging for most of the year as people turned off by his embrace of President Donald Trump and far right politicians in Europe balked at buying his cars.
But the jump comes with significant caveat: Tesla TSLA-Q benefited from a rush by consumers to take advantage of a US$7,500 tax credit before it expired on Sept. 30 that helped all EV makers.
In fact, many Tesla rivals saw sales jump even more. Fellow EV maker Rivian Automotive reported a 32 per cent increase in sales for the third quarter.
Tesla stock initially rose sharply on the news, but then fell into deep losses as financial analysts expressed skepticism about whether the new number signals a true turnaround given all the anti-Musk backlash.
“I don’t think most people are any more enamored with Elon now that they were a few months ago,” said Telemetry Insight’s Sam Abuelsamid. “I expect this is more a blip for Tesla than the restart of growth.”
Even one of the biggest bulls on Wall Street, Dan Ives of Wedbush Securities, was cautious, noting there are “still demand issues.”
Tesla stock dropped 2.7 per cent to US$447 in midday trading in New York.
Still, it was a blowout number with sales hitting 497,099 vehicles versus 462,890 in the same period last year. Analysts expected sales to fall slightly to 456,000, even with a boost from customers seeking to use the electric vehicle incentive.
Investors cheered Musk’s decision in April to leave Washington for Austin where Tesla is headquartered. But he is still heavily in political and social wars, alienating potential car buyers.
On Wednesday, he posted on X that he was canceling his Netflix subscription because of critical comments that an employee of the streaming services company made, which appeared to spark a wave of cancellations in turn.
The sharp fall on Thursday was also remarkable as investors have been surprisingly optimistic about the company in recent weeks despite terrible financial figures, sending Tesla stock up 34 per cent in September alone.
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They are betting that Musk’s planned new cheaper version of his bestselling Model Y will recharge sales. Musk has also been successful in shifting investor attention away from car sales to other aspects of the business — the rollout of its driverless robotaxi service planned for several cities and its Optimus robots for factory work and household chores.
Driving the stock higher has also been Musk’s apparent renewed focus on the company.
To help keep his attention on cars, Tesla board proposed last month a new pay package that would allow the Tesla CEO to earn US$1-trillion over the next several years if he meets certain sales and other financial goals. The pay package, unprecedented for U.S. companies already known for outsized CEO pay, recently drew criticism from Pope Leo in an interview lamenting widening income gaps.
If Musk meets his pay goals, he could be setting a record on top of his own record. He recently became the first person ever to hit US$500-billion in net worth, at least according to the rich list compiler Forbes magazine.
The 7 per cent sales rise in the last quarter compares with a 13 per cent plunge in the first three months of the year when Musk led Trump’s government cost-cutting efforts at the Department of Government Efficiency. In the following three months through June, sales fell again 13 per cent.
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The backlash in Europe against Musk had been also been fierce with sales plunging 40 per cent in more than two dozen countries after he publicly supported far-right politicians there.
Musk called British prime minister Keir Starmer an “evil tyrant” who belongs in prison and told Germans “things will get very, very much worse” in their country if they didn’t vote for the anti-immigrant Alternative for Germany party. Protests broke out in several cities, including a hanging of the billionaire in effigy in Milan and posters in London likening him to a Nazi.
For her part, the Tesla head of the board of directors who approved Musk’s latest pay package recently told Bloomberg that she is not sure if Musk’s politics have had any impact on the company’s finances. Robyn Denholm has earned nearly US$700-million in compensation for serving on the board since 2014, a package that itself has drawn criticism.
Tesla reports third-quarter earnings later this month. Profits for the previous quarter fell 16 per cent as the company continued to lose market share to European EV makers and the fast-growing Chinese rivals, such as BYD.
The robotaxi launch with a test run in Austin in June has had some hitches with reports of the cabs stopping suddenly for no reason or driving in the opposing lane in one instance. But Musk has says the driverless rides will be available in several other cities by the end of next year.