Signs Tesla Does Indeed Have Demand Challenges

Last Updated on: 23rd May 2025, 03:37 pm

Elon Musk said this week that there are no consumer demand concerns at Tesla*. However, he also said last year that they’d have sales growth in 2024, and it ended up they had a sales decline. He also said that Tesla would grow 50% a year on average in the 2020s, and the company isn’t anywhere close to that. And let’s not get into the other things he’s said that have been absurdly incorrect.

So, what are the signs that there may be consumer demand challenges at the moment? First of all, Tesla always releases higher-trim, higher-profit versions of new models first and then doesn’t offer the cheaper options until demand for those initial versions is waning. The company just launched the new Model Y (“Model Y Juniper”) a few months ago, and it is already offering the cheaper RWD version of the crossover. Based on my 13 years covering the company, I can say confidently that version of the Model Y would not be available yet if there was surging consumer demand for the AWD Tesla Model Y. That’s not to say Tesla is desperate for sales, but it implies that there isn’t nearly the sales surge that people (many critics as well as bulls) expected for the upgraded Model Y. And one would not expect a severe sales challenge for Tesla in this quarter no matter what, but this hint doesn’t bode well for Q3 and Q4.

Update: I just received the following email a few hours ago with the title “Low APR for Model Y Ends Soon.“

Tesla is pushing various incentives over email lately, as it has done for the past year plus as it has struggled to sell as many vehicles as it can produce — and failed in that regard if we’re being completely honest, as sales have been about 30% below production capacity. However, even a step further, I received a text message from Tesla yesterday pushing me to come in and test drive a car! I had only received 4 marketing text messages from Tesla before this. I have a hard time believing that Tesla has resorted to spamming people with text messages, which it hasn’t done since last July.

Also, reportedly, wait time from ordering to delivery is quite short now in various key markets, and we’ve seen no signs of a strong sales rebound in Europe — rather, sales seem to still be cratering in key markets there.

I don’t expect a huge year-over-year Tesla sales drop in Q2. However, the signs noted above tell me that Tesla is indeed having some demand challenges, and if those don’t change soon, I expect Q3 could be an especially upsetting quarter for Tesla sales. Let’s see what happens. And tell me if you have noticed any other clues — pro or con — regarding Tesla consumer demand and sales.

(Oh, and we haven’t even gotten to the possibility that Congress and Donald Trump will kill the $7,500 tax credit that helps people buy Tesla vehicles….)

*“We’ve lost some sales perhaps on the left, but we’ve gained them on the right. The sales numbers at this point are strong and we see no problem with demand,” Musk said this week at the Qatar Economic Forum. “The stock wouldn’t be trading near all-time highs if things weren’t in good shape, they’re fine, don’t worry about it.”