Tesla’s stock tumbled more than 9%, slipping below $1 trillion in market value for the first time since November 2024, following a sharp decline in European sales. The company’s struggles in the region come as rival automakers, particularly from China, gain ground, and CEO Elon Musk’s political controversies stir backlash among consumers.
While overall European electric vehicle (EV) sales grew by more than a third in January, Tesla’s sales fell by over 45% across the EU, EFTA, and the UK—and more than 50% in the EU alone, according to industry trade body Acea. This decline bucks the trend and marks another setback for Tesla, which in 2024 saw its first annual sales drop in over a decade.
Analysts attribute Tesla’s European decline primarily to increased competition, particularly from Chinese automaker BYD, which has been expanding aggressively by offering more standard features at lower prices.
Beyond competition, Tesla may also be losing customers due to Musk’s controversial political stances.
Musk has backed far-right figures and parties in multiple countries, including the UK’s jailed activist Stephen Yaxley-Lennon (Tommy Robinson) and Germany’s AfD party, whose leader he recently congratulated. In the U.S., he has been vocal in cutting federal development funds while positioning himself as a close ally of Donald Trump, despite Trump’s anti-EV stance and promise to roll back incentives for electric cars.
Peter Bardenfleth-Hansen, a former senior director at Tesla’s Europe, Middle East, and Asia division, said Musk’s political actions are hurting Tesla’s brand:
“There’s no doubt his flirting with the right in politics, running around on TV with a chainsaw, is not exactly helping his image,” he told the BBC’s Today programme. “He may be getting a bigger fanbase within a specific type of clientele, but they’re not the ones buying Teslas.”
Tesla’s stock had rallied after the U.S. election, with investors betting on Musk’s ties to Trump. However, analysts now question how Tesla will fare under a Trump presidency, given the Republican leader’s opposition to EV policies.
Further market uncertainty over interest rate cuts and Trump’s tariff plans could also be contributing to Tesla’s recent stock decline.
With sales slipping, competition rising, and Musk’s personal brand under fire, Tesla faces mounting challenges in maintaining its dominance in the EV market.