Elon Musk's 'Unprecedented Brand Damage' Means Tesla's Sales Drop Could Get A Lot Worse

Good morning! It's Friday, April 4, 2025, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. This is where you'll find the most important stories that are shaping the way Americans drive and get around.

In this morning's edition, we're taking a look at the impact of Musk's political activities on Tesla's brand, as well as the moves Mercedes-Benz might make to get around President Trump's tariffs. We're also going to talk about Infiniti's decision to cut some models from the U.S. that are built in Mexico, and a recall that is hitting over 100,000 large Ford SUVs.

JPMorgan Chase & Co. analyst Ryan Brinkman gave a deeply pessimistic estimate of Tesla's future, saying that the deeply underwhelming sales report confirmed "the unprecedented brand damage we had earlier feared." You really never want to hear the people who believed in you say stuff like that. He added that the sales report "causes us to think that — if anything — we may have underestimated the degree of consumer reaction." 

Since hitting a record high on December 17 — a little over a month after Donald Trump won the November Presidential election — sales have dropped 44%. You can probably expect a trend like that to continue if the Austin, Texas-based automaker's first-quarter sales are any indication. From Bloomberg:

During the first three months of the year, Tesla delivered 336,681 vehicles, its worst quarterly total since 2022. In addition to changing over production lines at each of its assembly plants to build the redesigned Model Y, the automaker was contending with Musk, its chief executive officer, becoming a more polarizing figure due to his interventions in global politics.

JPMorgan now expects Tesla's first-quarter earnings to slip to 36 cents a share, short of its previous projection of 40 cents and analysts' average estimate of 46 cents.

Brinkman also trimmed his full-year projection to $2.30 a share. Analysts surveyed by Bloomberg are on average estimating the company will earn $2.70 per share — and Brinkman notes that this figure has dropped 17% since Tesla last reported quarterly earnings in late January.

In what could be some good news for Tesla shareholders, Musk is expected to take a big step back from his role of leading the Department of Government Efficiency after his 130-day period as a temporary advisor to Trump has lapsed. 

Right now, Musk is considered a special government employee. That's a classification for temporary federal hires who are only supposed to work for 130 days out of the year in their roles. There's currently no formal date for him to leave, however, and the White House counsel's office is in charge of deciding when Musk has worked those 130 days.

In the 2024 election cycle, Musk became Trump's biggest donor — giving him over $250 million. He also attacked mainstream political figures in Europe and aligned himself with the far-right AfD party in Germany. Tesla sales in Germany dropped 62% in the last quarter.

Mercedes-Benz is thinking about moving the production of one of its vehicles to the U.S. to get around President Trump's 25% automotive tariffs. Right now, there's no word on exactly which model would be moved to the automaker's plant in Tuscaloosa, Alabama, which currently builds the EQS SUV among others. Production chief Jörg Burzer told reporters on April 3 that the move might be necessary to deal with the cost of the new duties. From Bloomberg:

"We're still assessing the impacts of these tariffs," Burzer said on the sidelines of a company event in Stuttgart, Germany. "We have made some plans, but flexibility is absolutely key."

In 2024, Mercedes' most popular imported model was the GLC, of which it sold 64,163 units in the U.S. That represents a 58% increase over the prior year. Since it starts at around $50,000, it has much smaller margins and faces stiffer competition than flagship models like the S-Class and G-Wagon.

Since the automaker already uses the Tuscaloosa plant to build other SUVs like GLE and GLS, it would make a lot of sense if the GLC were to join them. It's similar to how BMW builds the X3, X5, and X7 at its plant in Spartanburg, South Carolina.  

On top of this possible move, Mercedes-Benz has apparently considered cutting sales of lower-margin imports like the compact GLA crossover. It's a real messy time right now, folks.

In the wake of the new tariffs, Nissan announced that it will no longer take U.S.-based orders for two Infiniti SUVs it builds in Mexico. It's a pretty sizable scale-back of its operations at the joint-venture plant. Additionally, Nissan says it's going to keep a second shift at its plant that builds the Rogue crossover in Smyrna, Tennessee. Earlier this year, the Japanese automaker announced it would end one of the two shifts this month.

Now, Nissan is saying it won't accept any additional orders of the QX50 or QX55 for the U.S. Both crossovers are built at its COMPAS plant it operates with Mercedes-Benz (which uses the facility to build the GLB compact crossover) in Mexico. Production of both of those models is expected to be continued for other markets. From Reuters:

It was not immediately clear how much of the production is sold in other markets. The two Infiniti models have only been exported from Mexico to the U.S., according to data from Mexico's national statistics agency.

A Japan-based Nissan spokesperson said on Friday the models do go to other markets such as the Middle East and Canada, but could not immediately provide more details.

[...]

It is particularly exposed to the new tariffs as it exports the biggest number of cars from Mexico to the U.S. of any Japanese automaker.

Nissan has had a pretty rough go of it for a while, now, as sales continue to slide due to an aging lineup and a lack of hybrid options. These troubles have caused the automaker to cut its profit forecast three times in the fiscal year, and its debt was downgraded to "junk" status. 

Ford and recalls go together like peanut butter and jelly, and that's why the Blue Oval is contacting 105,322 2018-2020 Lincoln Navigator and Ford Expedition owners because of an issue with their seat belts. Apparently, they might fail to retract or extend, which is something you generally want your seatbelts to do. Luckily, the automaker isn't aware of any accidents or injuries related to the defective part made by German supplier ZF, according to an investigation from the National Highway Traffic Safety Administration. Here's more from Automotive News:

On affected vehicles, the driver or front passenger seat belt retractor pretensioners may deploy inadvertently, the report said. The seat belt will then be locked in position, unable to retract or extend, increasing the likelihood of injury in a crash. The defect is because of oxidation in a portion of the seat belt pretensioner.

[...]

Those impacted can take their vehicle to a Ford or Lincoln dealer to have the pretensioners replaced. Ford has a reimbursement plan for those who have already paid for the issue to be remedied.

The report from NHTSA says dealers were notified of the recall on March 31, and owners should expect to be contacted between April 14-18. 

On this day in 1841, President William Henry Harrison died just 32 days after being sworn into office — giving him the distinct honor of having the shortest presidential term in office.

Harrison developed a fatal case of pneumonia after giving what was — ironically — the longest inaugural address in history on a cold March morning. The speech clocked in at a feature-length one hour and 45 minutes. Here's a little more on 'ol Billy Harrison's life, from History.com:

Harrison was the last president born as an English subject before the American Revolution. A native of Virginia, he attended college with the intent of studying medicine, but opted to join the army before finishing his degree. President John Adams took note of Harrison's exemplary service in the Indian Wars of the Northwest Territories and, in 1801, appointed him governor of the Northwest Territories (now Indiana and Illinois). Harrison later fought in the Battle of the Thames River during the War of 1812. He went on to become a congressman and the ambassador to Colombia before running with John Tyler on the Whig Party ticket in the presidential election of 1840.

Much to the horror of the political establishment, Harrison and Tyler campaigned in a vigorous style considered unseemly in their era. They used Harrison's nickname, Tippecanoe, which he had earned during a brutal Indian War campaign at Tippecanoe Creek, and concocted the campaign slogan Tippecanoe and Tyler, too. Harrison and Tyler held boisterous rallies during which they handed out free bottles of hard cider housed in little log cabin-shaped bottles. Their tactics, however controversial, were successful, and on March 4, 1841, Harrison was sworn in as the ninth U.S. president.