Tesla Stock Plunges as European Sales Drop 45%
Tesla’s stock fell 8.4% on Tuesday, bringing its market value below $1 trillion for the first time since November. The drop followed data showing a sharp decline in the company’s European sales, which fell 45% year-over-year in January in the European Union (EU), the European Free Trade Association and the UK.
The European Automobile Manufacturers’ Association reported that Tesla registered just 9,945 new cars across the EU, the UK, and the European Free Trade Association last month. In Germany, its largest European market, sales plummeted to their lowest level since July 2021. France also saw a steep decline, with Tesla’s sales dropping 63%. Meanwhile, China’s BYD surpassed Tesla’s UK registrations for the first time ever.
While the overall European EV market grew 37%, Tesla struggled to keep up, losing EV sales to competitors like Volkswagen, Renault, and Chinese automakers.
Tesla’s European decline comes amid broader struggles for the company. It reported its first-ever annual drop in deliveries last year and has seen its stock fall 25% in 2024. The company’s price-to-earnings ratio remains high compared to traditional automakers, raising concerns about overvaluation.
What caused the drop in sales?
Industry analysts point to a combination of factors behind Tesla’s struggles. The company has been reworking its Model Y production lines, which CFO Vaibhav Taneja warned would lead to weeks of lost output. Tesla has also been engaged in a price war with Chinese EV makers, putting pressure on margins.
Beyond production and pricing challenges, CEO Elon Musk’s growing involvement in politics has raised concerns among investors. His support for far-right parties in Europe, criticism of leaders in Germany and the UK, and comments on geopolitical issues have made him a controversial figure. Recent polls in Germany and the UK indicate that his political stance is unpopular with European consumers, potentially impacting Tesla’s brand image. Some investors are also concerned that his increasing responsibilities, including overseeing government restructuring in the U.S., could be distracting him from Tesla.
Despite the slump, Tesla bulls remain hopeful. The company is working on a lower-cost model expected next year, which some believe could reinvigorate demand. Musk has also teased a paid autonomous vehicle service, though details remain unclear.
For now, Tesla faces mounting competition from both legacy automakers and Chinese EV companies. As Volkswagen, Renault, and SAIC ramp up their electric offerings, Tesla must find a way to regain lost ground in Europe—or risk falling further behind in a rapidly evolving market.
