Tesla experienced a significant decline in European sales during January 2025, with German registrations plummeting 59.5% to just 1,277 vehicles. This sharp decrease occurred despite Germany being home to Tesla’s only European manufacturing facility. The downturn wasn’t isolated to Germany, as similar patterns emerged across other European markets, with France seeing a 63% reduction, Norway dropping 38%, and the UK declining by 8% compared to the previous year.
The electric vehicle manufacturer’s market share in Germany contracted substantially, falling from 14% to 4%, even as the overall EV market demonstrated strong growth of over 50%. This decline comes at a time when the broader European EV market has shown signs of recovery following earlier subsidy reductions in Germany and France.
Industry analysts have proposed several factors contributing to Tesla’s declining sales. Among these are consumer anticipation for the upcoming revised Model Y, scheduled for 2025, and potential negative reactions to CEO Elon Musk’s political engagement in Europe. Schmidt Automotive Research suggested to the New York Times that German consumers might be responding to Musk’s political commentary regarding European affairs.
The company’s challenges aren’t limited to Europe. In California, Tesla’s largest American market, new vehicle registrations declined by 11.6% in 2024, contrasting with a modest 1.2% increase in overall EV sales, according to data from the California New Car Dealers Association.
These developments follow Tesla’s recent report of
softer-than-expected fourth quarter results for 2024. Market reactions to these results have been mixed, with some analysts expressing concern about the company’s trajectory. Seth Goldstein of Morningstar highlighted the market’s disappointment with both profitability figures and future guidance, noting the shift from previous
projections of “20% to 30% growth” to a more modest “return to growth” outlook.
However, not all observers share this pessimistic view. Cathie Wood maintains an optimistic stance, suggesting that recent stock movements might reflect anticipation of Tesla’s Cybercab scaling in 2026, with production expected to commence this year. Wood expressed confidence in Tesla’s ability to develop a $15,000 vehicle within a five-year timeframe, noting that such projections might be difficult for traditional automotive analysts to comprehend.
The sales decline in Germany coincides with controversy surrounding Musk’s political activities in the country, including his publication of an opinion piece supporting Germany’s AfD party in Welt am Sonntag newspaper, an action that reportedly led to the resignation of the publication’s editor.
Despite these challenges, Tesla’s stock has demonstrated resilience in the face of the Q4 2024 results and European sales decline. The company continues to navigate a complex landscape of market dynamics, consumer sentiment, and political considerations as it works to maintain its position in the global EV market.
The situation reflects broader changes in the European EV market, where initial subsidy-driven growth has given way to more complex market dynamics. As Tesla faces increased competition and evolving consumer preferences, its ability to adapt to these challenges while maintaining market share will be crucial for its future success in the region.