Craig Adderley Pexels
Tesla posted poor results for the first quarter of the year. They were below most expectations. The big EV company said it produced 408,000 vehicles and delivered over 358,000 vehicles. One worry is that the difference between the new numbers means Tesla has built a backlog of unsold vehicles.
Two things badly damaged Tesla’s fortunes in the last year. The first was founder Elon Musk’s alliance with President Trump to run the Department of Government Efficiency (DOGE). The department was meant to cut federal government expenses. Many outsiders said the cuts were random and damaged essential departments. The two men started a feud in March that ran for three months. It is not possible to know for certain, but the fight may have driven away some Tesla buyers.’
The other injury was the cut in the $7,500 EV tax credit, which Trump eliminated as of September 30. Electrek reported “New EV sales cratered 28% year-over-year in Q1 2026 to just 212,600 units, according to new data from Cox Automotive”. Used EV sales rose as people seeking EVs sought lower prices.
Tesla has one advantage. Its main competitors, which were the largest car companies in the US and Europe, mostly exited the sector after poor EV sales. And that exit was expensive. Ford, for example, took a $19.5 billion write-off. Thus, much of Tesla’s competition disappeared. (Tesla’s sales in the EU continued to be weak)
Tesla has a new tailwind, as gas prices have moved above $4. In some states, like California, the most populous state, the price is closer to $6. It is unlikely people will rush to buy EVs if the price only stays this high for a few weeks. However, if it looks like a months-long problem, some Americans’ gasoline bills could rise thousands of dollars a year. (The average annual cost of gas for an American household is about $2,500) The average price of gas has risen 44% in the last month.
There is concern that the Iranian blockade of the Strait of Hormuz, which transits about 20% of the world’s seaborne crude, could last for months. This would drive oil prices much higher, and, with them, gas prices.
With much of its competition gone, if Americans do move toward EVs, Tesla has the best chance. among manufacturers who sell EVs in the US, of benefiting.
