Tesla’s (TSLA) stock dropped on Tuesday as a new report shows demand woes are picking up in Europe, with sales dropping a precipitous 45% in January.
Only 9,945 Tesla EVs were registered in Europe, down from 18,161 a year ago in January, per the European Automobile Manufacturers’ Association. Meanwhile, overall electric vehicle sales jumped 37.3%, indicating that EV demand was strong but just not for Tesla. Germany, the UK, and the Netherlands saw the biggest gains in EV sales.
Tesla stock closed down 8.4% on Tuesday, with shares down 25% year to date, and the company’s market cap sank below $1 trillion.
At close: February 25 at 4:00:01 PM EST
Part of the reason for the drop in Tesla sales may be due to the Model Y, which is in the middle of a refresh, meaning customers may be waiting for the updated model. New competitive models from Volkswagen, Renault, and China’s SAIC Motor likely ate into sales too.
Also, Tesla’s sales issues in the European Union come as CEO Elon Musk is seen as meddling in the region’s political landscape.
Musk’s support for Germany’s far-right Alternative for Germany (AfD) party is controversial in the country, where AfD secured the second-most seats in Parliament over the weekend. Musk also made a hand gesture at a political rally in the US last month that many saw as a Nazi salute, though Musk refuted the claim. And Musk’s call for jailing UK Prime Minister Keir Starmer isn’t helping the Tesla CEO’s image in Britain either.
The fresh data out of the region follows weaker country-by-country data for Tesla released earlier this month.
Germany reported only 1,277 new Tesla vehicles registered in January, down nearly 60% from the same month in 2024. Spillover effects were also seen in France, where January sales fell 63%, as well as 38% in Norway and 12% in the UK.
The drop in sales is not all due to Musk, as European automakers and upstart Chinese EV makers like BYD and Geely have released compelling models.
Oppenheimer analyst Colin Rusch said Musk’s foray into politics couldn’t come at a worse time.
“We view Mr. Musk’s political activity and increased regionalization as a potential overhang on TSLA sell-through. We see the biggest risk in CA and the broader EU, where TSLA has seen ongoing declines since the start of 2023,” Rusch wrote earlier this month, also highlighting softening January sales in China as a concern.
Others believe Musk’s political stances and domino effect on Tesla’s brand image can be minimized. “We view this as containable brand issues for Tesla for now that are not a major cause for concern,” Wedbush analyst Dan Ives wrote on Monday, alluding to Musk’s political forays.
