Tesla has encountered a significant setback in the European market, with sales across the EU, EFTA, and the UK dropping by over 45% in January. In the EU alone, sales plummeted by more than 50%, marking a sharp contrast to the overall growth in European electric vehicle sales, which surged by more than a third during the same period. The decline in Tesla's sales may be attributed to increasing competition and potentially a reaction to CEO Elon Musk's political activities.
In recent months, Tesla has faced formidable competition in Europe, particularly from Chinese manufacturers like BYD. BYD's strategic move to include certain features as standard, which other manufacturers typically charge extra for, has bolstered its appeal among European consumers. This competitive edge has allowed BYD to make significant strides in the market, putting pressure on established players like Tesla.
The decline in sales had immediate repercussions on Tesla's stock performance. The company's shares dropped by more than 9% following the announcement of the sales figures, bringing its valuation below $1 trillion for the first time since November 2024.
Another element contributing to Tesla's challenges may be CEO Elon Musk's controversial political engagements. Musk has publicly supported Germany's far-right AfD party and its leader, congratulating them on a record second-place result in elections. Additionally, he has voiced support for jailed UK far-right activist Stephen Yaxley-Lennon, known as Tommy Robinson, and criticized UK Prime Minister Sir Keir Starmer. These political interventions may have influenced some car buyers to take what AJ Bell investment director Russ Mould describes as a "principled stand."
"How anybody thought this was going to be good for Tesla, I don't know," – Russ Mould
Musk's activities are not limited to Europe; he has also been involved in domestic US politics, where he has supported cuts to US development funds and efforts to significantly reduce federal funding.