Tesla (TSLA, Financial) is experiencing a significant downturn in the German market. In January, Tesla's new car registrations in Germany plummeted by 59% to just 1,277 vehicles, marking the lowest monthly sales since July 2021. This drop, reported by the German Federal Motor Transport Authority, highlights a sharp reduction in Tesla's market share in Germany, even as the overall electric vehicle market grew by 54% year-over-year.
Analysts suggest that CEO Elon Musk's public support for Germany's far-right party, Alternative for Germany, may have impacted demand. Tesla's sales decline isn't limited to Germany; in January, sales in France fell by 63%, and in the UK, they dropped by 12%. Musk's recent criticism of UK Prime Minister Keir Starmer and his Labour government might have contributed to the UK sales drop. Additionally, Musk's association with former US President Donald Trump, who has threatened EU tariffs, casts a shadow over Tesla's European market prospects.
Production adjustments for the new Model Y, Tesla's global bestseller, have also led to temporary capacity losses, affecting the Berlin Gigafactory. Furthermore, inventory shortages might have arisen from Tesla's year-end sales push. Although Tesla delivered a record number of vehicles in Q4 2023, it failed to meet annual growth expectations, marking the first annual sales decline in over a decade.
Challenges extend beyond Europe. In California, Tesla faced a year-long sales decline in 2024, particularly a 36% drop in Model 3 sales. Political tensions between Musk and California Governor Gavin Newsom could also be influencing market performance in the state.
