Tesla Inc (NASDAQ:TSLA) is facing a “full-blown crisis” driven largely by brand damage linked to CEO Elon Musk, according to Wedbush analysts.
The electric vehicle maker reported 337,000 deliveries for the quarter, well below the Wall Street consensus of 352,000 and even the whisper number of about 350,000.
Wedbush analysts had anticipated a weak quarter, but the extent of the miss was worse than expected.
“We are not going to look at these numbers with rose-colored glasses… they were a disaster on every metric,” the firm wrote in a note.
Production stood at 362,600 units, impacted by Model Y refreshes that resulted in several weeks of lost output. But Wedbush said the bigger concern is deteriorating demand, particularly in Europe, as well as in the US and China. The firm pointed to mounting protests at Tesla dealerships, instances of violence targeting Tesla drivers, and continued controversy surrounding Musk’s public statements and political leanings as factors weighing on the brand.
“The time has come for Musk… it’s a fork-in-the-road moment,” Wedbush said, adding that the more politically engaged he becomes, particularly with cryptocurrency-related topics like Dogecoin, the more Tesla’s brand suffers.
Despite the near-term turmoil, Wedbush remains bullish on Tesla’s long-term potential, particularly in autonomous driving. The firm values Tesla’s self-driving business at $1 trillion, citing the upcoming launch of unsupervised Full Self-Driving (FSD) in Austin as a major industry milestone. However, the analysts warned that Musk must shift focus back to Tesla’s core business.
“This continues to be a moment of truth for Musk to navigate this brand tornado crisis and get onto the other side of this dark chapter,” Wedbush wrote. “The future is so bright, but this is a full-blown crisis Tesla is navigating now, and it’s primarily self-inflicted.”