Tesla sales tumble 13% as Musk backlash, competition and aging lineup turn off buyers

Tesla Talk

Tesla sales are down to start the year. Getty Images

Tesla sales fell 13% in the first three months of the year, another sign that Elon Musk’s once high-flying electric car company is struggling to attract buyers.

The double-digit drop is likely due to a combination of factors, including its aging lineup, competition from rivals and a backlash from Musk’s embrace of right wing politics. It also is a warning that the company’s first-quarter earnings report later this month could disappoint investors.

Tesla reported deliveries of 336,681 globally in the January to March quarter. The figure was down from sales of 387,000 in the same period a year ago. The decline came despite deep discounts, zero financing and other incentives.

Analysts polled by FactSet expected much higher deliveries of 408,000.

Dan Ives of Wedbush said in a note to clients that Tesla is seeing soft demand in the United States and China, as well as facing pressure in Europe.

“The brand crisis issues are clearly having a negative impact on Tesla...there is no debate,” he said.

Ives said that Wall Street financial analysts knew the first-quarter figures were likely to be bad, but that it was even worse than expected, calling them a “disaster on every metric.”

The sales drop came three weeks after President Donald Trump held an extraordinary press conference outside the White House in which he praised Tesla, blasted boycotts against the company and bought a Tesla himself while TV cameras rolled in an effort to help lift sales.

“I don’t like what’s happening to you,” said Trump, before slipping into a red Model S and exclaiming, “Wow. That’s beautiful.”

After falling as much as 6% in early Wednesday, Tesla stock shot up more than 5% in afternoon trading after a report from Politico, citing anonymous sources, that Musk may soon step down from leadership of his Department of Government Efficiency, the cost-cutting group that has led to tens of thousands of federal workers losing their jobs.

Tesla investors have complained the DOGE work has diverted Musk's focus from Tesla, where he is the CEO. On Tuesday, New York City's comptroller overseeing pension funds down $300 million this year on Tesla holdings called for a lawsuit accusing a distracted Musk of "driving Tesla off a financial cliff.”

Tesla’s stock has plunged by roughly half since hitting a mid-December record as expectations of a lighter regulatory touch and big profits with Donald Trump as president were replaced by fear that the boycott of Musk's cars and other problems could hit the company hard.

Analysts are still not sure exactly how much the fall in sales is due to the protests or other factors. Electric car sales have been sluggish in general, and Tesla in particular is suffering as car buyers hold off from buying its bestselling Model Y while waiting for an updated version.

Still, even bullish financial analysts who earlier downplayed the backlash to Musk’s polarizing political stances are acknowledging that it is hurting the company, something that Musk also recently acknowledged.

“This is a very expensive job,” Musk said at a Wisconsin rally on Sunday, referring to his DOGE role. “My Tesla stock and the stock of everyone who holds Tesla has gone roughly in half."

The protests come as the Austin, Texas electric vehicle maker faces fierce competition from other EV makers offering vastly improved models, including those of BYD. The Chinese EV giant unveiled in March a technology that allows it cars to charge up in just five to eight minutes.

Tesla is expected to report earnings of 48 cents per share for the first quarter later this month, up 7% from a year earlier, according to a survey of financial analysts who the car company by research firm FactSet.

Nearly all of Tesla’s sales in the quarter came from the smaller and less-expensive Models 3 and Y, with the company selling less than 13,000 more expensive models, which include X and S as well as the Cybertruck.

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Tesla is expected to bring a 'megafactory' to Brookshire.

Tesla targets Houston area for $200 million 'mega' battery factory

Tesla Town

Tesla is expected to bring a “megafactory” and 1,500 manufacturing jobs to the Houston area.

According to various news reports this week, Tesla intends to spend $200 million on a facility in Brookshire, Texas. The Waller County Commissioners Court approved tax abatements on March 5 for the new plant.

“We are super excited about this opportunity—1,500 advanced manufacturing jobs in the county and in the city," Waller County Precinct 4 Commissioner Justin Beckendorff said during Wednesday’s Commissioners Court meeting.

Tesla will lease two buildings in Brookshire's Empire West Business Park. According to documents from Waller County, Tesla will add $44 million in facility improvements. In addition, it will install $150 million worth of manufacturing equipment.

As part of the deal, Tesla will invest in property improvements that involve a 600,000-square-foot, $31 million manufacturing facility that will house $2 million worth of equipment and include improvements to the venue.

The facility will produce Tesla megapacks, which are powerful batteries to provide energy storage and support, according to the company. A megapack can store enough energy to power about 3,600 homes for one hour.

Tesla can receive a 60 percent tax abatement for 10 years. According to the tax abatement agreement, Tesla has to employ at least 1,500 people by 2028 in order to be eligible for the tax break.

In addition to the employment clause, Tesla also will be required to have a minimum of $75 million in taxable inventory by January 1, 2026, which will increase to $300 million after three years.

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This story originally appeared on our sister site, InnovationMap.

The technology allegedly stolen involves high-speed battery assembly lines that use a proprietary technology owned by Tesla. Photo courtesy of Tesla

2 charged with stealing battery manufacturing secrets from Texas-based EV giant

proprietary technology

Two men are accused of starting a business in China using battery manufacturing technology pilfered from Tesla and trying to sell the proprietary information, federal prosecutors in New York said Tuesday.

Klaus Pflugbeil, 58, a Canadian citizen who lives in Ningbo, China, was arrested Tuesday morning on Long Island, where he thought he was going to meet with businessmen to negotiate a sale price for the information, federal authorities said. Instead, the businessmen were undercover federal agents.

The other man named in the criminal complaint is Yilong Shao, 47, also of Ningbo. He remains at large. They are charged with conspiracy to transmit trade secrets, which carries up to 10 years in prison if convicted.

A lawyer for Pflugbeil did not immediately return phone and email messages seeking comment Tuesday night. Tesla also did not immediately return an email message.

The technology at issue involves high-speed battery assembly lines that use a proprietary technology owned by Tesla, maker of electric vehicles.

The two men worked at a Canadian company that developed the technology and was bought in 2019 by “a U.S.-based leading manufacturer of battery-powered electric vehicles and battery energy systems,” authorities said in the complaint. Tesla then was sole owner of the technology.

Prosecutors did not name either company. But in 2019, Tesla purchased Hibar Systems, a battery manufacturing company in Richmond Hill, Ontario. The deal was first reported by Electric Autonomy Canada.

"The defendants set up a company in China, blatantly stole trade secrets from an American company that are important to manufacturing electric vehicles, and which cost many millions of dollars in research and development, and sold products developed with the stolen trade secrets,” Breon Peace, U.S. attorney for the Eastern District of New York, said in a statement with officials with the Justice Department and FBI.

In mid-2020, Pflugbeil and Shao opened their business in China and expanded it to locations in Canada, Germany and Brazil, prosecutors said. The business makes the same battery assembly lines that Tesla uses with its proprietary information, and it markets itself as an alternative source for the assembly lines, authorities said.

The electric car company's CEO said early Thursday that Tesla would get shareholders to vote on whether to switch its corporate registration to Texas, where its physical headquarters is located. Photo courtesy of Tesla

Tesla investors potentially to vote on switching the carmaker's corporate registration to Texas

to be or not to be

Elon Musk wants Tesla investors to decide on moving the company's corporate listing to Texas after a Delaware court decided he shouldn't get a multibillion-dollar pay package.

The electric car company's CEO said early Thursday that Tesla would get shareholders to vote on whether to switch its corporate registration to Texas, where its physical headquarters is located.

“Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas,” Musk wrote on his social media platform X, formerly known as Twitter.

Musk had polled X users earlier on the same question, with 87.1% of 1.1 million respondents voting yes. “The public vote is unequivocally in favor of Texas!” he wrote.

Musk, who has previously polled people on X before making decisions, moved Tesla's headquarters to Austin, Texas, from California in 2021.

His announcement comes after a judge in Delaware, where the company is currently registered, ruled last Tuesday that Musk is not entitled to a landmark compensation package potentially worth more than $55 billion that was awarded by Tesla’s board of directors.

After the ruling, Musk took to social media to to express his displeasure.

“Never incorporate your company in the state of Delaware,” he wrote in one post. He later added, “I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters.”

The ruling came five years after shareholders filed a lawsuit accusing Musk and Tesla directors of breaching their duties and arguing that the pay package was a product of sham negotiations with directors who were not independent of him.

The defense countered that the pay plan was fairly negotiated by a compensation committee whose members were independent and had lofty performance milestones.

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6+ must-attend Houston energy transition events for June 2026

Mark Your Calendars

Editor's note: Summer is here, and June brings a slate of must-attend events for those in the energy transition sector. CLEANPOWER is already underway, and the month continues with EPC Show and InnovateEnergy Week. Mark your calendars and register now.

June 1-4, 2026 — CLEANPOWER 2026 Conference and Exhibition

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This event continues through June 4 at the George R. Brown Convention Center. Register here.

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This event takes place June 4 at the Post Oak Hotel. Register here.

June 9 — Greentown Go Make Kickoff

Head to the Ion to celebrate the Greentown Go Make 2026 cohort. The open-innovation program with Shell Catalysts & Technologies and Technip Energies focuses on catalytic solutions for industrial decarbonization and the energy transition. Hear pitches from the founders and network with a select group of startups while enjoying food and drink.

This event takes place June 9 at the Ion. Register here.

June 11, 2026 — Goals & Gigawatts Kickoff Party

Head to downtown Houston for Goals & Gigawatts: The Power of & Kickoff Party. The exciting Houston Energy & Climate Week gathering will combine fútbol, culture, climate, energy, innovation, and community for one unforgettable afternoon. Celebrate the opening FIFA match in Mexico City while connecting with professionals, innovators, investors, community leaders, and organizations shaping the future of energy and climate initiatives in Houston and beyond.

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InnovateEnergy Week 2026 brings together the Energy Drone & Robotics Summit, Industrial Digital Reality Summit, and Industrial AI Nexus Summit for three days of high-powered innovation in Houston. This highly anticipated event will unite 1,500+ industrial, energy, and engineering leaders to explore the future of autonomous operations, spatial computing, digital twins, XR, AI, geospatial intelligence, and remote systems from the stars to the seafloor.

This event begins June 22 at Woodlands Waterway Marriott. Register here.

New Texas water plan does not consider data center growth, critics say

For the Future

A draft of Texas’ 2027 State Water Plan is drawing concerns from some water protection advocates who say it fails to account for one growing industry: data centers.

The plan, created by the Texas Water Development Board, will guide tens of billions of dollars in water development projects over the coming decades.

On Memorial Day, people packed Lake Travis to enjoy the water and sunshine while the lake remains near full capacity. But some advocates warn drought conditions could quickly return.

“Once we get into August, September, we'll be probably right back in the same drought situation,” said Mike Clifford with the Greater Edwards Aquifer Alliance.

The Texas Water Development Board released the draft plan in April. It recommends thousands of water projects carrying a projected cost of $174 billion over 50 years.

“We're not as shocked about the dollar amounts as some people are,” Clifford said. "To secure our water future, that's not an insane amount to ask for."

However, Clifford said his organization was surprised the draft does not specifically account for the growing impact of data centers, which can consume large amounts of water.

“If you leave the data centers out, it's not really a plan in our opinion. It's going to have to be changed and it's going to fall short,” Clifford said.

According to Data Center Map, Texas is currently home to 461 data centers.

Clifford argues the state should use projected future growth, not just historical data, when planning for long-term water needs.

“They're looking at the previous 10 years or 20 years or whatever, and we didn't have a lot of data centers in Texas,” he said.

Researchers at the the University of Texas at Austin estimate data centers could account for as much as 9 percent of Texas’ total water use by 2040, or potentially surpass the oil and gas industry that same year.

Read the full story from CultureMap news partner KVUE.com.

Houston startup strikes deal to develop hydrogen production plant in Canada

hydrogen partnership

Houston-based cleantech startup Vema Hydrogen has reached a tentative agreement with Canada-based CHARBONE Corp. to develop a hydrogen production and processing plant in Québec.

The deal would couple Vema’s production of engineered mineral hydrogen with CHARBONE’s purification, compression and distribution capabilities.

Engineered mineral hydrogen, also known as orange hydrogen, is produced underground by accelerating naturally occurring geochemical reactions in iron-rich rock formations, according to the journal Energy & Environmental Science.

“Across high-value markets — from aviation and maritime fuels to industrial gases — there is incredible demand for Vema’s low-carbon [hydrogen]. Now, more than ever, we need a pathway to deliver these low-carbon fuels,” Pierre Levin, CEO of Vema, said in a news release.

The project would enable Vema to expand into emerging markets like low-carbon maritime and aviation fuel, e-fuels and power generation. Incorporating CHARBONE’s capabilities, the agreement would also support Québec’s hydrogen supply chain.

“The market is demanding high-value industrial gases, and our customers need cleaner, more reliable supply. By pairing Vema’s [hydrogen] feedstock with our purification and distribution capabilities, we’re strengthening Québec’s position as a regional hub for next-generation hydrogen,” Dave Gagnon, CEO of CHARBONE, added in the release.

Vema said in February that it had completed drilling of its first two pilot wells in Québec, making them the world’s first pilot well for orange hydrogen. It’s the first time Vema’s technology has been used outside a lab.

“This pilot will provide the critical data needed to validate [our hydrogen] at commercial scale and demonstrate that Quebec can lead the world in this emerging clean energy category,” Levin said. “The quality of the rock within our core samples is exactly what we expected and is very promising for hydrogen yields.”

Shortly before Vema carried out the pilot drilling, it signed a 10-year deal with California-based energy technology company Verne Power to supply clean hydrogen for California data centers. Over the course of the 10-year agreement, Vema will boost annual production of orange hydrogen to more than 36,000 metric tons.

“There is a robust market for baseload power generation across the U.S., where data centers are straining the grid,” Levin said. “As we power California’s fastest-growing markets with clean hydrogen, we look toward expanding our hydrogen to markets globally and supporting AI-driven power hubs.”

Vema, founded two years ago, raised $13 million in seed funding in 2025.

“The energy transition and emerging uses of hydrogen have spurred demand for clean hydrogen,” Levin said in its funding announcement. “However, existing decarbonized hydrogen production methods simply don’t work — they are too costly and energy-intensive. Vema is here to change that. It’s time to unlock a new era of scalable, low-carbon hydrogen.”

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