Tesla's 11% Q1 Sales Miss Points to Big Cash Burn & Musk Being "Let Go"

Musk might be let go by Trump after rising complaints from insiders and Congress. Tesla bulls cheered this on, but it's quite negative.

• Tesla’s Q1 deliveries of 336,681 units were 11% below expectations of 377,592, yet the stock rallied by 5.3% on the day due to heavy call buying to support the stock (details below).

• Tesla’s stock tends to get propped up by call buying after bad news, which was worse than normal yesterday: Musk spent $20 million to thwart the Wisconsin Supreme Court Democratic candidate’s victory, but failed. This, on top of bad Q1 sales numbers before yesterday’s market open, led to unusually high call options buying to support the stock (call options volumes yesterday were 30% higher than last Wednesday).

• The fact that Musk had to have Trump do an infomercial on the White House lawn on March 10th after Tesla’s stock hit $222 and yesterday’s rush to keep Tesla above $260 implies that the Vested Interests fear a margin call if Tesla falls below $200. And rightfully so, given Trump’s 25% auto tariffs (details here).

• The US auto industry will be deeply damaged after Trump’s 25% tariffs: While Tesla was seen to be better off than other carmakers in the US, it’s too weak to be able to hike prices in line with tariffs. Stronger rivals will eat most of their tariff costs to steal Tesla’s market share.

• Despite seeing $2.8 billion in free-cash flow (FCF) burn this time last year, it seems like Tesla is set to repeat that as Q1 2025 production was 8% higher than sales (Q1 2024 was 12% higher, but had a lower weight of Cybertuck inventory).