Tesla’s European sales took a significant hit in January, dropping by 45% year-over-year. While Tesla saw a decline, the broader electric vehicle (EV) market grew by 37% during the same time period. Several factors are contributing to this slump, including production adjustments, intensifying competition, and CEO Elon Musk’s increasing political activity.
According to data from the European Automobile Manufacturers’ Association (ACEA), Tesla registered only 9,945 new vehicles in Europe last month, down from 18,161 in January 2024, the lowest volume of Tesla sales in the region in two years. The decline was particularly severe in key markets like Germany and France, where sales plummeted 60% and 63%, respectively.
Meanwhile, competing automakers such as Volkswagen, Stellantis, and Renault saw significant growth as they ramped up EV production to meet tightening emissions regulations.
With the decline, Tesla’s market share in Europe also fell to 1% from 1.8% a year earlier. (via Bloomberg)
One of the key contributors to Tesla’s struggles is the transition of the new Model Y, which affected both sales and production. As Tesla implements updates to its best-selling vehicle, dubbed “Project Juniper,” production slowdowns have resulted in limited inventory, affecting deliveries in January.
While production changes explain part of the sales dip, another likely factor affecting Tesla’s European market position is the political controversy surrounding Musk. The Tesla CEO has been vocal in his support for far-right political figures in Europe, particularly in Germany, where he publicly endorsed the Alternative for Germany (AfD) party.
Tesla is also facing intensifying competition from both legacy automakers and new entrants, particularly from China. For the first time, Tesla registered fewer vehicles in the UK than Chinese automaker BYD. Additionally, Tesla’s aggressive end-of-year sales push in December 2024 may have temporarily inflated numbers, leading to a sharp drop in January.
Despite the steep decline in January sales, Tesla is expected to rebound in the coming months as production ramps up again and the new Model Y becomes widely available.
