Tesla shares plunge following sharp decline in European sales
Tesla’s stock value experienced a sharp decline, dropping more than 9% after the company reported a significant drop in sales across the UK and EU, according to sources. This decline pushed Tesla’s market capitalization below $1 trillion for the first time since November 2024, raising concerns among investors about the company’s competitive position and future growth prospects.
While the overall European electric vehicle (EV) market grew in January expanding by over a third according to trade body Acea, Tesla sales moved in the opposite direction. Across the EU, EFTA, and the UK, Tesla’s sales plummeted by more than 45%, with an even steeper decline of over 50% in the EU alone. This slump follows a difficult 2023 for the company, when it recorded its first annual decline in sales in over a decade. As demand for Tesla’s vehicles weakened, competitors, particularly Chinese automakers, ramped up production and offered more attractive pricing and features.
One of the biggest challenges Tesla faces in Europe is the growing dominance of Chinese electric car manufacturers like BYD. These companies have been expanding aggressively, offering vehicles with standard features that Tesla often provides only as optional add-ons. As a result, BYD and other competitors have gained significant market share, pulling potential buyers away from Tesla. AJ Bell investment director Russ Mould emphasized that increasing competition is likely the primary reason behind Tesla’s January sales decline. He noted that Chinese manufacturers are not only producing high-quality EVs but are also pricing them competitively, making them an appealing alternative for consumers.
Beyond market competition, Tesla’s brand image has been affected by controversies surrounding its CEO, Elon Musk. Mould suggested that some potential buyers may be making a “principled stand” against Musk’s political actions, which have sparked controversy in both the US and Europe.
Musk has made headlines for his vocal support of far-right political figures, including backing the AfD party in Germany and congratulating its leader following the party’s record second-place finish in elections. In the UK, he has expressed support for jailed far-right activist Stephen Yaxley-Lennon, also known as Tommy Robinson, while openly criticizing Prime Minister Sir Keir Starmer.
In the US, Musk has aligned himself with former President Donald Trump, describing himself as “first buddy” to the Republican leader. While Tesla shares initially surged after Trump’s election victory due to expectations of favorable business policies, doubts have emerged about how Tesla will fare under a Trump administration. Trump has openly opposed government incentives for electric vehicles and has pledged to roll back efforts to increase EV adoption—a stance that could significantly impact Tesla’s future in the US market.
With falling sales, increasing competition, and political uncertainties, Tesla is facing significant headwinds in both the European and global markets. While the company remains a dominant player in the EV sector, its recent struggles highlight the challenges of sustaining its position amid shifting consumer preferences, regulatory changes, and market competition. Investors will be closely watching Tesla’s next moves, particularly how it responds to growing pressure from Chinese automakers and whether it can maintain consumer confidence despite the controversies surrounding its high-profile CEO.