Tesla's Crisis in Europe Deepens: Sales Decline for the Eighth Month and Interconnected Challenges
The American company Tesla is facing a perfect storm in its European markets, as its sales continue to decline for the eighth consecutive month during August. This ongoing decline comes amid fierce competition from Chinese companies and traditional manufacturers, as well as escalating negative reactions to CEO Elon Musk's engagement with far-right parties.
Data on electric vehicle registrations in France, Denmark, and Sweden - the first European countries to publish their monthly figures - reveal a bleak picture of Tesla's performance. In France, the company's new car registrations fell by 47.3% in August year-on-year, while the overall car market grew by about 2.2%. The situation was not better in Sweden, where sales plummeted by more than 84% despite the electric vehicle sector stabilizing and the overall market rising by 6%. Denmark also saw a sharp decline in Tesla registrations of 42%.
Norway, Tesla's main market in Europe, stood out as the only exception, with the company's registrations jumping by 21.3%. However, this jump remained modest compared to the performance of the Chinese competitor BYD, which recorded remarkable growth of 218%. Data for August is still awaited from Germany and the United Kingdom, Tesla's largest markets in Europe, after experiencing a decline in sales this year.
Behind these numbers, expert analyses reveal a host of interconnected challenges facing Tesla. The company's relatively limited and aging production line poses a significant burden, especially in a market flooded with modern models from competitors. Matthias Schmidt, an analyst at Schmitt Automotive, stated, "One reason for the continued decline in Tesla's sales volume is partly due to the more competitive market environment."
Controversial political stances by Elon Musk have also complicated the crisis, as he has supported far-right parties in Europe and contributed to funding Donald Trump's campaign. Jenny Buckley, CEO of Electrifying.com, noted that "it is clear that Musk's influence on the brand has become increasingly divisive," explaining that "more than half of the participants in the site's surveys confirmed that Elon Musk's persona deters them from buying a Tesla car," indicating that "the company's dominance is no longer a given."
The updated Model Y, which was relied upon to revive sales, failed to curb the decline, as sales continued to plummet sharply even after deliveries began across Europe in June.
These challenges have been exacerbated by a crisis of confidence in the used car market. Andy Lyleland, co-founder of SC Insights, explained that Tesla is facing "a decline in brand loyalty and a loss of its technological edge" alongside pressures from "the falling prices of its used electric cars." This sharp decline in value resulted from the company repeatedly lowering the prices of its new cars since 2023, undermining consumer confidence in the residual value of its vehicles.
In light of this clear data, Musk's recent statements during the second-quarter investor call in July, when he insisted that "there are no issues with Tesla's sales volume in the European market," seemed to be a denial of reality. Schmidt commented that these statements, along with the company's market share decline in Western Europe to 1.7% in the first half of 2024 from 2.5% in 2023, made Musk appear "disconnected from reality."
