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Financial Market Reactions
Tesla's declining global sales have also impacted its stock performance. On a recent trading day, Tesla shares fell by 5.6%, reflecting investor concerns over the company's sales trajectory and market position.
Tesla's recent sales declines across major markets highlight challenges stemming from political controversies, production disruptions, and intensified competition. Addressing these issues is crucial for Tesla to maintain its leadership in the rapidly evolving EV industry.
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Europe: Intensifying Competition and Market Dynamics
In January 2025, Tesla's European sales dropped by 45%, with only 9,945 vehicles registered across the EU, UK, and EFTA regions, marking a two-year low. Germany and France, two of Tesla's key European markets, reported significant declines of 60% and 63%, respectively. The UK, however, saw an 11% increase in Tesla registrations during the same period.
Several factors contribute to Tesla's European sales slump:
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Political Backlash: Musk's endorsement of Germany's AfD party has led to consumer resistance, affecting Tesla's brand image.
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Supply Chain Disruptions: Production adjustments for the updated Model Y, known as Project Juniper, have caused delays, leading consumers to postpone purchases in anticipation of the new model.
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Increased Competition: Traditional automakers are accelerating their EV production to meet stringent EU emission regulations, offering aggressive pricing and improved market penetration. This intensifies competition for Tesla, especially as the overall EV market in Europe grew by 34% in January 2025.
Australia: Consumers Distancing from Musk's Politics
Tesla's sales challenges extend to Australia, where February 2025 saw a 72% drop compared to the same month in 2024. The entry-level Model 3 experienced an 81% decline. This downturn is partly attributed to Musk's increasingly right-wing political views and his alignment with former U.S. President Donald Trump. Notably, Musk's controversial gesture at a Trump rally has alienated some consumers. In response, some Australian Tesla owners are disassociating themselves from Musk through bumper stickers mocking him, while others are trading in their vehicles for alternative brands.
Germany: A Sharp Decline Amid Political Controversy
In February 2025, Tesla's sales in Germany plummeted by 76%, with only 1,429 vehicles registered, according to the Federal Motor Transport Authority. This sharp decline contrasts with the overall 31% increase in electric vehicle (EV) registrations in the country during the same period.
Analysts suggest that Tesla's declining sales in Germany may be linked to CEO Elon Musk's political involvement. Musk's public endorsement of the far-right Alternative for Germany (AfD) party ahead of the February 23 elections has been controversial, given the party's anti-immigration stance and criticism of the political establishment. While the AfD secured a second-place finish, the likely future chancellor, Friedrich Merz, has vowed to exclude the party from governing coalitions.
Wall Street is turning its back on Elon Musk
In recent months, Tesla has experienced significant declines in vehicle sales across key international markets, raising concerns about the company's global performance and brand perception.