Does Musk effect materializes as Tesla sales nosedive in key markets?

Tesla is facing a significant downturn in sales across major markets, marking a challenging start to 2025 for the EV giant. In Belgium, registrations plummeted 44.8%, but also in the Netherlands, France, and Germany sales slid to their lowest level in over a year. The backdrop is noticeably bigger than its rivals. It seems that mingling politics and business doesn’t fit the glove in Europe.

In Belgium, Tesla registered 1,008 units last January, starkly contrasting with the 1,826 units from the same month in 2024. The drop isn’t attributed to market mechanisms.

Rival Polestar, for instance, saw sales soar by 115.8%, though the absolute volume, at 300 units, remains three times less than that of its American competitor.

Steep fall in steady markets

There’s a trend in Tesla’s poor performance as the same freefall is witnessed all over Europe. In France, Tesla recorded a 63% drop in sales last month compared to the previous year, selling just 1,141 vehicles, well below the market’s overall EV decline of just 0.5%.

In the Dutch EV market, which remained steady overall, sales fell from 6,000 units in December 2024 to 900 units in January. In Germany, Tesla saw a 41% decrease in sales last year, outpacing the broader EV sector’s 27% contraction.

Overall, the company’s European sales declined 13% in 2024, a stark reversal for a brand that has historically dominated the segment.

Fluctuations during the year’s transition aren’t uncommon due to shifts in tax and subsidy policies in several key markets. But Tesla undoubtedly takes a much bigger hit than average.

One possible explanation is the rising competition from legacy automakers and emerging EV start-ups, many of whom are rolling out compelling alternatives to Tesla’s aging model lineup.

Analysts suggest that while Tesla has long enjoyed a first-mover advantage, its lack of new product launches and increasing consumer expectations for innovation may contribute to its sales struggles.

Arm up, sales down?

However, another factor looms large over the company’s performance: CEO Elon Musk. The billionaire’s increasingly vocal political stances – including his support for far-right parties in Europe, like the German AfD, and his close alignment with former US President Donald Trump – have drawn significant backlash.

Some industry observers speculate that Musk’s controversial actions may alienate potential buyers who do not wish to be associated with his political leanings.

Bloomberg has reported that some consumers are actively turning away from the brand for this reason, though quantifying the exact impact remains difficult.

The arm gesture from Elon Musk at President Trump’s inauguration doesn’t fare well with European customers either. In Germany, an activist group projected the image on the Grünheide factory under the slogan “Heil Tesla.”

No sun in the Golden State

Several companies, however, have also decided to scrap the brand from their car policies. Until recently, Musk and his brand were seen as the messiah of climate-friendly electric mobility, but his recent statements have turned him into a bogeyman. Sales of anti-Elon stickers (“I bought this car before Elon went crazy”) have soared, a sloganed way of addressing what seems to be the heart of the problem.

Over the Atlantic, the outlook isn’t much sunnier. Tesla’s sales also fell in its home market of California, where its market share dropped from 60% in 2023 to 52.5% last year, even as the state’s overall EV market continued to expand.

Tesla’s deliveries in the Golden State declined by 11.6%, marking the brand’s first annual volume decline in over a decade. Reversing the trend will be challenging.

California governor Gavin Newsom, who vowed to compensate for the federal unwinding of EV incentives, is forging a loophole to keep Tesla out of the subsidy scheme, basing the method on volume.

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