Tesla is facing a severe downturn in its European market, with sales in Germany plunging 59% in January. The decline comes at a turbulent time for the company, as CEO Elon Musk made politically charged remarks at a German nationalist party convention, drawing widespread criticism. Musk’s comments, in which he accused Germany of focusing too much on “past guilt” for Nazi-era crimes and urged voters to support the right-wing Alternative for Germany (AfD) party, may have contributed to Tesla’s waning appeal among German consumers.
Germany, home to Tesla’s sole European manufacturing facility, recorded only 1,277 new Tesla registrations in January, according to the German Federal Motor Transport Authority. Meanwhile, competitors, particularly domestic and Chinese electric vehicle (EV) manufacturers, saw a 54% surge in demand.
The downturn was not isolated to Germany. Tesla’s European market share shrank across multiple key regions. In France, Tesla sales plummeted 63% year-over-year, while the UK saw a more modest but still concerning 12% decline. In Sweden, where a mechanics’ strike against Tesla has dragged into its second year, sales dropped 44%. Norway, another traditionally strong EV market for Tesla, recorded a 38% decline.
While political backlash may have influenced consumer sentiment, industry analysts suggest additional factors are at play. Schmidt Automotive Research noted that Musk’s controversial political statements, including a gesture made after Donald Trump’s inauguration that was widely interpreted as a Nazi salute, could be impacting Tesla’s reputation. However, other potential contributors include consumer anticipation of the updated Model Y, expected to be released by the end of March, and growing competition from European and Chinese EV makers offering increasingly sophisticated alternatives.
Across the Pond
Tesla’s struggles are not confined to Europe. In the United States, the automaker is also experiencing a slowdown, though less dramatic. California, the largest EV market in the U.S., saw Tesla registrations decline by 11.6% in 2024, even as overall EV sales climbed 1.2%, according to the California New Car Dealers Association. The numbers suggest that Tesla’s waning market dominance is part of a broader trend rather than an isolated European phenomenon.
Adding to the pressure, Musk’s focus on cost-cutting measures, including his push for a Department of Government Efficiency to slash U.S. spending, may be diverting attention from Tesla’s operational challenges. As competition intensifies and consumer preferences shift, the company’s ability to maintain its once-dominant position in the EV market is increasingly in question.