Musk Blames Fed For Soft Tesla Sales, But Rate Cuts Won’t Cure His Woes

Elon Musk has been arguing for months that the Federal Reserve is primarily to blame for Tesla’s declining sales in the domestic U.S. market.

Tesla’s U.S. sales fell year-over-year for the past two consecutive quarters and are tracking toward a drop of about 50,000 units to 600,000 vehicles. The company has, not to mention, been overtaken by BMW in EU EV sales. I Photo: Tesla X

He believes that if the Fed cuts interest rates, it will lower borrowing costs, thus fueling demand, Christiaan Hetzner reported for Fortune.

The start of a long easing cycle, widely expected to begin this September, could reduce interest rates by nearly half by the end of 2026. However, one former industry executive warned that the EV manufacturer might not benefit disproportionately.

“A Fed rate cut will help the overall industry; I don’t think it’s going to benefit EVs over internal combustion engines,” Mark Fields told CNBC.

Insurance rates remain high for EVs specifically, a fact the National Association of Insurance Commissioners (NAIC) attributed in February to the lack of both a steady supply of replacement parts and trained mechanics authorized to service high-voltage vehicles.

Fields is well-acquainted with the auto industry, having served as CEO of Ford for four years and later as interim CEO of Hertz.

He shepherded the latter out of bankruptcy in 2021. It was Fields who was behind Hertz’s now-infamous October 2021 purchase of 100,000 Teslas at the height of the speculative EV boom.

The company had a little more than $4 billion in revenue at the time; the deal fueled a $119 billion surge in Tesla’s market cap, turning it into a trillion-dollar company overnight.

One of the companies hit hardest by EV repair costs has been Hertz, thanks in large part to Musk and Tesla.

Tesla’s U.S. sales fell year-over-year for the past two consecutive quarters and are tracking toward a drop of about 50,000 units to 600,000 vehicles, according to Cox Automotive’s Kelley Blue Book. Even if you smooth out the last six quarters, growth in its domestic market has effectively ground to a halt.