Tesla's stock experienced a sharp decline of more than 9% following disappointing sales figures in Europe and the UK for January. While overall electric vehicle sales in Europe grew by over a third during the month, Tesla's performance diverged dramatically, with its sales plunging by more than 45% across the EU, EFTA, and the UK and over 50% specifically in the EU.
The disappointing sales results have resulted in Tesla's market valuation dipping below the $1 trillion mark for the first time since November 2024. Analysts point to mounting competition, particularly from Chinese manufacturer BYD, as a major factor behind the decline. BYD’s vehicles, which come standard with several features that other manufacturers charge extra for, have increasingly appealed to cost-conscious consumers in the region.
In addition to competitive pressures, political controversies surrounding Tesla's CEO Elon Musk may also be affecting consumer sentiment. Musk's recent political interventions including his support for controversial figures and criticism of key political leaders in the US, UK, and Germany have drawn significant attention and could be causing some buyers to take a principled stand against the brand.
Industry expert Russ Mould of AJ Bell highlighted that both competitive dynamics and Musk's political activities are contributing to the challenging market environment for Tesla. Despite previous investor optimism spurred by Musk’s perceived closeness to Donald Trump, such endorsements now appear less beneficial, particularly as Trump has publicly expressed opposition to electric vehicle initiatives.
As Tesla grapples with these headwinds, the company faces a critical period in which restoring market share in Europe will be essential. The mixed signals from strong overall growth in the region, contrasted with Tesla’s falling sales, underscore the challenges of sustaining its competitive edge in an increasingly crowded market.
