Tesla’s electric vehicle empire is hitting a rough patch that investors can’t ignore. The company, long a darling of the green energy and tech sectors, is grappling with declining sales in Europe and a stock price drop of over 5% in early trading. This isn’t just a blip—it’s a signal of deeper challenges.
According to Yahoo! Finance, Tesla’s core auto business is under pressure as European EV registrations fell 27.9% in May to 13,863 units, marking the fifth consecutive month of decline, while CEO Elon Musk’s political stances stir discontent among some owners.
Let’s start with the numbers. According to the European Automobile Manufacturers Association (ACEA), Tesla’s sales in May were down significantly compared to last year. While slightly better than April’s staggering 49% drop, the trend is unmistakable—demand is weakening.
Year-to-date through May, Tesla’s European registrations are down a brutal 37.1% to 75,196 units. Country-specific data paints an even grimmer picture: France saw a 67% plunge to just 721 units, while Sweden recorded a 53.7% drop to 503 units. Other markets like Denmark, the Netherlands, Spain, and Portugal reported declines ranging from 19% to 68%.
Interestingly, Norway stands alone as the only European territory showing sales growth for Tesla in May. Meanwhile, the broader EV market in Europe, including the UK and the European Free Trade Association, grew by 25% in May. Total vehicle registrations in the region, however, dipped by 0.6%.
Even with wider availability of the Tesla Model Y, sales couldn’t rebound to last year’s levels. This persistent slump raises questions about whether Tesla’s high prices or shifting consumer preferences are to blame. Is the EV giant losing its edge?
Beyond the numbers, Tesla faces a reputational hurdle tied to CEO Elon Musk. His involvement in the Trump administration politics, support for right-wing leaders in Europe, and leadership of the Department of Government Efficiency (DOGE) in the US have disillusioned some Tesla owners. This backlash could be denting the brand’s appeal among its eco-conscious base.
On the innovation front, Tesla recently conducted a high-profile robotaxi test in Austin, Texas. While this showcases the company’s push into cutting-edge tech, it does little to address the immediate sales woes in Europe.
Looking at the bigger picture, Tesla’s delivery numbers are under scrutiny. In the first quarter, the company reported 336,681 deliveries, well below the Bloomberg consensus of 390,342—its worst performance since Q2 2022. Wells Fargo estimates second-quarter deliveries at 343,000, a 21% drop year over year and 17% below Street expectations of 411,000.
Analyst Colin Langan of Wells Fargo noted, “Tesla’s fundamentals are coming in worse than expected.” This sentiment echoes among investors as the stock slid over 5% in early trading. Tesla’s second-quarter production and delivery report, due next week, will be a critical litmus test.
Meanwhile, the global EV landscape offers mixed signals. While EV sales in Europe grow steadily, albeit slowly, China—the largest EV market—shows signs of a slowdown. Competitor BYD, the volume leader in EVs and plug-ins, has cut production by reducing shifts at some factories and delaying new lines.
BYD, which sold 4.27 million cars globally last year, aims for 5.5 million this year. Yet, Reuters reports the company has slashed output by at least a third at four of its seven Chinese factories, including canceling night shifts. This suggests even giants are feeling the pinch of softening demand.
For investors, Tesla’s story is a cautionary tale about over-reliance on brand momentum. The European sales slump, coupled with Musk’s polarizing political moves, signals potential volatility ahead. Now’s the time to reassess exposure to Tesla stock.
Consider diversifying into other EV players or sectors less tied to consumer sentiment swings. Keep an eye on Tesla’s upcoming delivery report for clarity on whether this is a temporary dip or a structural shift. Prudent wealth-building means staying ahead of the curve, not chasing past glory.