Editor’s Note: I just spent two weeks in Italy, where the roads are narrow and parking spaces are hard to come by. For that reason, you don’t see many large passenger vehicles other than taxis.

What I noticed most was the absence of the pickup trucks and SUVs that I see everywhere in the United States. Instead, the cities of Rome and Florence were flooded with tiny sedans that are designed to navigate the labyrinth of twisting alleys and cobblestone roads that were laid out when horse drawn carriages were the primary mode of transportation.

Also interesting to me was the juxtaposition of electric vehicle charging stations shoehorned in among stone churches and ancient buildings that had no electricity at all when they were constructed hundreds of years ago. I wondered what Leonardo da Vince would think of his beloved Tuscany now, swarming with tourists arriving in air-conditioned buses powered by the wind and the sun. My guess is he knew it was coming all along.

Caught in the Mousetrap

The first smartphone hit the market 31 years ago. The IBM Simon was introduced in 1994 and was the first mobile phone to include apps. It was a bust.

It wasn’t until Canadian company Research in Motion, since renamed BlackBerry (NYSE: BB), came out with its first BlackBerry device five years later that smartphones started to catch on. And once Apple (NSDQ: AAPL) introduced its iPhone in 2007, the smartphone market exploded.

The moral of that story? Building a better mousetrap does not always ensure long-term success. International Business Machines (NYSE: IBM) never gained a strong foothold in the smartphone market, and BlackBerry eventually succumbed to Apple’s superior marketing and design skills.

Now, I’m wondering if electric vehicle (EV) manufacturer Tesla (NSDA: TSLA) might become the next BlackBerry. It did not invent the electric vehicle; in fact, the first EV in the United States was introduced in the 1890s.

However, Tesla was the first automaker to make EVs cool to own, just as a BlackBerry smartphone was considered mandatory for any ambitious corporate ladder climber during the early 2000s. Now, BlackBerry doesn’t even make smartphones anymore.

To be sure, Tesla isn’t at risk of going out of the EV business anytime soon. According to Kelley Blue Book, three of the top five selling EV models in the United States last year were made by Tesla.

Fewer Sales and Lower Prices

That’s the good news. The bad news is that Tesla sold 37,000 fewer vehicles in the USA in 2024 than the year before. And that was before Tesla founder and CEO Elon Musk alienated a big segment of his customer base by getting involved in politics.

Tesla’s drop in sales last year was also not due to an overall decline in demand for EVs. In 2024, EV sales were 7.3 percent higher in the United States than in 2023. During the first quarter of this year, EV sales outpaced the previous year’s Q1 sales by more than 11 percent.

During the first quarter, Tesla’s EV sales were 9 percent lower than the year before. The implication is obvious; consumers are still buying EVs, but they are buying less EVs made by Tesla.

None of this comes as a surprise to me. In fact, I wrote about it four months ago after Musk got involved in the Trump administration’s Department of Government Efficiency (DOGE). I said then, “I am concerned about the impact Musk’s political actions may have on Tesla’s financial performance.”

Read This Story: Tesla Sags as Musk Lollygags

That suspicion was confirmed on April 2 when Tesla released its fiscal 2025 Q1 results. During the first quarter, Tesla’s total automotive revenues were 20 percent lower than the year before. On a GAAP basis, its EPS (earnings per share) attributable to common shareholders fell by 71 percent on a year-over-year basis.

The company attributed that massive drop in earnings to several factors including a decline in unit sales and a lower average selling price per unit sold. In other words, they are selling fewer units and at lower prices. That is pretty much the definition of a business in trouble.

Spinning in Circles

All the news is not bad for Tesla’s shareholders. The company’s ‘Energy generation and storage revenue’ sales jumped 67 percent during the first quarter. Also, its ‘Services and other revenue’ climbed by 15 percent.

That dynamic has some analysts on Wall Street wondering if Tesla should spin off its energy generation and storage business as a separately traded entity. However, that income stream is 80 percent smaller than its automotive business, so it isn’t likely to fetch a high enough price to justify selling it yet.

Also, a lot of investors still believe in Tesla. At last week’s closing share price near $294, TSLA is valued at 140 times forward earnings compared to a multiple of 22 for the S&P 500 Index.

For now, Wall Street is willing to wait for Musk to turn the ship around. His recent war of words with President Trump all but assures that his days of meddling in politics are over.

Instead, Musk should focus on improving the company’s manufacturing efficiency. For better or worse, Tesla is in the EV business. And right now, it is in danger of becoming the next BlackBerry if it doesn’t figure out how become better at doing just that.