Tesla has a problem – and it’s not just Elon Musk’s politics

WASHINGTON – Tesla Inc’s sales started slowing even before chief executive Elon Musk really threw his weight around in US politics. Now that he is playing a starring role in the Trump administration and has taken his electioneering global, Tesla is falling on even harder times.

The electric vehicle maker got off to an extremely slow start in 2025 as its polarising CEO went to work dismantling US government agencies and attacking political figures across Europe.

It has not helped that Tesla paused production at all four of its assembly plants to begin making the redesigned Model Y, its most popular offering.

Mr Musk himself says he is having “great difficulty” running his businesses while also tending to his work in Washington.

While Tesla executives have said the company will return to growth in 2025 after registering its first annual vehicle sales slip-up in more than a decade, some analysts now expect the company will record a further decline in sales.

What’s the state of Tesla’s sales?

The most dramatic declines happened in Europe, where sales across the region fell 45 per cent in the month of January.

In Germany, the situation was particularly stark, with registrations for new Teslas plummeting 71 per cent through the first two months of the year – likely the result of potential buyers being put off by Mr Musk weighing in on the country’s Feb 23 federal election. 

In China, the world’s biggest EV market, shipments from Tesla’s Shanghai plant – destined for elsewhere in the country as well as for export – plunged 49 per cent in February to its lowest level since July 2022. One reason is the company’s updated Model Y sport utility vehicle, which required pausing production lines for weeks in order to make updates to its manufacturing equipment and processes.

Even so, the company was already having trouble keeping up with its Chinese rival BYD Co.

For the time being, numbers for the US, where Tesla derives almost half of its revenue, are harder to come by.

Kelley Blue Book (KBB), an American market researcher, estimates that the company sold only 43,650 vehicles in February, among its lowest monthly totals over the last three years. 

Citing new competitors and the blowback against Mr Musk, KBB’s recent report questioned whether the carmaker would ever top its February 2023 sales peak when Americans bought 60,325 Teslas. In the US, KBB says the company has never otherwise exceeded 60,000 vehicles sold in a month.

While Tesla is still the most popular EV brand in the US, its market share has fallen from more than 75 per cent in 2022, to under 50 per cent as at 2024, according to KBB.

How does this compare with EV sales more broadly?

The pace of EV sales growth has slowed globally in recent years, “but it is not the same everywhere in the world”, according to BloombergNEF.

Some governments removed subsidies, while consumers baulked at relatively high prices and still-limited charging infrastructure in many regions.

Still, battery-electric and plug-in hybrid vehicle sales around the world rose 24 per cent to a record 17.2 million in 2024, according to BloombergNEF. The researcher is expecting a re-acceleration to roughly 30 per cent growth in 2025.

In Europe, industrywide sales of battery-electric vehicles jumped 37 per cent during the first month of the year, despite Tesla’s 45 per cent decline in January sales.

One company that is defying Tesla’s current trajectory? China’s BYD – short for Build Your Dreams – is on a tear, with sales soaring 161 per cent in February. The company sells both fully electric vehicles and plug-in hybrids.

So why is Tesla losing market share?

Mr Musk has taken a less-is-more approach to Tesla’s line-up. 

The company sells only five models: the Model S (which debuted in 2012), Model X (2015), Model 3 (2017), Model Y (2020) and the Cybertruck (2023).

What’s more, not all of those vehicles are sold globally. The Model 3 sedan and Model Y SUV alone accounted for more than 95 per cent of worldwide deliveries in 2024. 

BYD, by contrast, offers more models – the exact number depends on the country – and most of them sell for less than Mr Musk’s most popular vehicles. BYD has also announced it has developed and is testing an EV battery system that charges within five minutes, which could make the brand even more competitive.

Increased competition from new entrants – including the likes of Xiaomi Corp, which is expanding into car manufacturing from mobile phones in an already crowded Chinese EV market – is also threatening Tesla’s standing.

How much are politics at play?

The starkest sign that Mr Musk’s close links to US President Donald Trump and the Republican Party was beginning to drag on Tesla came from California – a Democratic stronghold – where its registrations fell in all four quarters in 2024. 

Since the election, backlash in the US and Europe has only grown.

A decentralised movement called Tesla Takedown has emerged, with

people protesting at Tesla showrooms across the U

S, and organisers calling for a boycott of the company’s products. The carmaker has also dealt with incidents of vandalism in the Netherlands, arson in France, and a stunt that went viral at its factory in Germany.

Mr Trump came to Mr Musk’s defence with a photo opportunity at the White House on March 11 where

he perused several Tesla vehicles and pledged to buy a Model S

.

It remains to be seen whether endorsements from Mr Trump and right-wing figures including Mr Sean Hannity, Mr Alex Jones and Mr Ted Cruz will gain the company more customers than it risks losing from the political left.

What else is Tesla doing to recover?

Tesla is rolling out the redesigned Model Y and has said that new vehicles – including more affordable models – are on track to start production later in 2025, but it has provided few details about what those cheaper options will be.

Mr Musk is increasingly betting Tesla’s future on autonomous vehicles and robots.

The company has said that volume production of a car without a steering wheel or pedals, called Cybercab, is planned for 2026. Mr Musk also hopes to begin delivering a humanoid robot called Optimus to other companies starting in 2026.

Part of what worries analysts, some of whom have said Tesla’s deliveries will fall again in 2025, is the lack of clarity around what Tesla will have to offer customers in the meantime.

Investors also increasingly doubt that Tesla will make meaningful adjustments to its line-up any time soon and that the company is more likely to just introduce lower-priced versions of its existing vehicles. BLOOMBERG