Tesla Shares Fall 9% After European Sales Plunge by Nearly Half

Shares in electric vehicle maker Tesla have experienced a significant drop of over 9% after a dramatic fall in European and UK sales during January. The company’s market value dipped below $1 trillion for the first time since November 2024, as Tesla’s performance bucked the trend of growing electric vehicle (EV) sales across Europe.

 

January Sales Slump and Market Competition

Tesla’s sales in the EU, EFTA, and the UK fell by more than 45% in January, with the decline being even more pronounced in the European Union alone, where sales plummeted by over 50%. This stark contrast comes at a time when overall European EV sales grew by more than 30% during the same period, according to the European Automobile Manufacturers Association (ACEA).

AJ Bell investment director Russ Mould pointed to increased competition in the market as a primary factor contributing to Tesla’s poor performance. “Tesla has been facing intense competition, particularly from Chinese manufacturers like BYD, which offers features as standard that Tesla charges extra for,” Mould explained. “That makes the competition much more attractive to buyers.”

 

The Impact of Elon Musk’s Political Involvement

In addition to market competition, analysts believe that Tesla’s struggles may also be linked to Elon Musk’s political statements and actions. Mould suggests that some car buyers might be taking a “principled stand” against Musk’s political views, which have stirred controversy both in the US and abroad.

Musk has been involved in several political controversies recently. In the US, he has criticized federal funding for electric vehicle development and is known for his ties to former President Donald Trump, whom he has called a “first buddy.” However, Trump’s stance on electric vehicles could be problematic for Tesla, as the former president has indicated that he would roll back incentives aimed at increasing EV adoption.

"How anybody thought Musk’s close relationship with Trump was going to be beneficial for Tesla, I don’t know," Mould said. "Trump isn’t a supporter of electric vehicles, so that’s not the kind of political connection that will help Tesla in the long run."

Musk has also caused a stir in the UK, where he has expressed support for far-right figures, including the jailed activist Stephen Yaxley-Lennon (also known as Tommy Robinson), and has criticized UK Prime Minister Sir Keir Starmer. Furthermore, in Germany, Musk’s support for the far-right AfD party, particularly congratulating its leader after the party’s strong showing in recent elections, has added to the controversy surrounding the Tesla CEO.

 

Broader Economic Concerns

In addition to Musk’s political involvement, broader economic factors may also be playing a role in Tesla’s recent struggles. "There’s market uncertainty about the direction of interest rate cuts and concerns about Trump’s tariff plans, which could affect Tesla’s prospects in the US and globally," Mould noted.

Despite these challenges, Tesla remains a key player in the EV market, but the company may need to navigate both rising competition and shifting political landscapes to maintain its leading position.

 

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