Tesla CEO Elon Musk has pointed to global factory retooling efforts for the updated Model Y as a key factor behind the company’s decline in vehicle deliveries during the first quarter, as the electric vehicle (EV) maker grapples with weakening sales momentum across major markets.
Tesla reported a 13% year-on-year drop in global deliveries in the first quarter of 2025, even as EV sales rose overall in the United States, Europe, and China. Musk said in a CNBC interview this week that a temporary production halt was necessary to prepare for a refreshed version of the Model Y, Tesla’s top-selling vehicle.
“As for Q1, we had a global factory changeover for the Model Y,” Musk said. “So there’s a new version of the Model Y that came out, which required a factory shutdown across the world. The Model Y is the number one selling car in the world, so, you know, we can’t make cars if the factories are retooling.”
Musk noted that the company intentionally scheduled the retooling for the first quarter, citing historically lower seasonal demand. “We’ve seen a major rebound in demand at this point,” he added.
Tesla’s updated Model Y aims to maintain the vehicle’s leading position in the global EV market. However, the company’s performance has yet to show signs of recovery. In April, Tesla saw sharp sales declines in Europe, with some markets reporting drops of up to 80%. In China, Tesla deliveries fell 9% last month, while overall EV sales in the country increased by 38%.
In the United States, April sales data has not yet been published. Tesla releases sales figures on a quarterly basis, though market research firms such as Cox Automotive and S&P Global Mobility are expected to provide estimates. The recent rollout of a lower-priced Model Y and a planned production pause at Tesla’s Austin, Texas facility suggest the company continues to face headwinds.
Beyond production issues, Tesla has faced scrutiny over CEO Elon Musk’s political associations and high-profile public statements, including a recent controversy involving former U.S. President Donald Trump. Musk downplayed concerns that his political views could hurt the brand.
“There have been some pros and cons,” Musk said. “When you buy a product, how much do you care about the political views of the CEO, or do you even know what they are?”
Tesla has not disclosed a timeline for when it expects sales growth to resume, though Musk’s comments signal the company is banking on increased demand for its refreshed lineup in the second half of the year.