Tesla Shares Plummet Amid European Sales Decline
Shares in electric car giant Tesla tumbled more than 9% as EU and UK sales slumped by nearly half in January.
Tesla’s market valuation has dropped below the $1 trillion mark for the first time since November 2024, reflecting growing challenges in the European market. The company is facing stiff competition, particularly from Chinese automakers, and CEO Elon Musk’s controversial political stances may also be contributing to the downturn, analysts suggest.
Sales Slump Despite Broader EV Growth
While the European electric vehicle (EV) market saw growth of over 30% in January, Tesla’s sales bucked the trend, plummeting more than 45% across the EU, EFTA, and the UK. In the EU alone, the decline exceeded 50%. The drop follows a tough 2024 for Tesla, during which its global sales fell for the first time in over a decade amid weakening demand and rising competition.
According to AJ Bell investment director Russ Mould, intensifying competition—especially from Chinese manufacturer BYD—has been a key factor. BYD’s success is partly due to offering features as standard that Tesla and other automakers charge extra for.
Beyond competition, some potential customers may be distancing themselves from Tesla due to Musk’s political affiliations and public statements, Mould noted.
Musk’s Political Influence Raises Questions
Musk’s political activities have sparked controversy in both the US and Europe. In the US, he has been involved in efforts to slash government development funds, while in the UK, he has publicly supported jailed far-right activist Stephen Yaxley-Lennon (also known as Tommy Robinson) and repeatedly criticized Prime Minister Sir Keir Starmer. In Germany, Musk has backed the far-right Alternative for Germany (AfD) party, congratulating its leader after a recent electoral success.
A former senior director of Tesla’s Europe, Middle East, and Asia division suggested that Musk’s political leanings are contributing to Tesla’s struggles.
“It’s definitely one of the reasons behind the decline,” said Peter Bardenfleth-Hansen in an interview with the BBC. “There’s a domino effect. His alignment with right-wing politics and his unpredictable public behavior—like running around on TV with a chainsaw—isn’t exactly helping his image. He may be gaining a fanbase in certain circles, but they’re not the ones buying Teslas or investing in the company.”
Investor Concerns Over Trump Ties
Tesla shares had previously surged following the US election due to Musk’s close relationship with Donald Trump, who he has referred to as his “first buddy.” Investors initially believed this connection would benefit Tesla, but Trump has expressed strong opposition to EV adoption and has vowed to roll back initiatives supporting the industry.
“How anybody thought this was going to be good for Tesla, I don’t know,” Mould said.
Additionally, broader market concerns, including uncertainty over interest rate cuts and fears about Trump’s potential tariff policies, may be weighing on Tesla’s stock performance.
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