Tesla has already begun expanding to foreign markets, as most companies do when they’ve peaked in one market.
While the U.S. remains the company’s most lucrative region, Tesla has probably reached the ceiling of what it can achieve here.
Analysts have pointed to Tesla’s aging vehicle lineup (though Tesla has promised updates for the popular Model Y later this year) and CEO Elon Musk’s sudden foray into right-wing politics as reasons for the company’s sluggish first-quarter sales.
Related: Elon Musk sends strong message to Tesla stock investors
Tesla reported delivering 336,681 vehicles in the quarter, down from the 387,000 it delivered a year ago, and short of analyst expectations of 408,000 deliveries.
Electric vehicle demand in general seems to have plateaued, and while the industry continues to grow, the years of explosive growth appear to be behind us.
Tesla began seeing its U.S. market share fall in 2023 amid increased competition from traditional automakers and new startups like Rivian.
After peaking well above 50% of the U.S. EV market share in early 2023, Tesla now accounts for less than half, and it is quickly approaching the 40% mark, according to Cox Automotive.
The latest delivery data shows that Tesla’s fall in Europe has been even worse.
Europe has not been kind to Tesla this year.
Image source: Bocsi/Bloomberg via Getty Images
Tesla loses major ground in Europe for a second straight quarter
The reports out of Europe have been steady all year.
The continent is turning on Tesla.
Just a couple of years after it spent billions to build a European hub in Germany, Tesla’s future on the mainland appears to be worse than ever.
European sales of Tesla vehicles dropped another 49% in April to 7,261, despite overall EV sales rising 34% in the month, according to the European Automobile Manufacturers Association.
Tesla sales are down nearly 40% for the year-over-year January to April period.
So, while increased competition definitely contributes to Tesla’s decline, Musk’s comments as CEO also contribute.
Musk has publicly endorsed the AfD, a German right-wing party that some view as extremist, was accused of doing a Nazi salute on stage (Musk has vigorously denied these allegations), and has spoken out against African immigration to Europe.
Related: Elon Musk says he is ‘paranoid’ about this issue; he’s right to be
All of these political leanings align him with conservatives in America, who don’t buy many EVs anyway, and conservatives in Europe, who are a political minority.
But while Musk alienates the people most likely to buy an EV, he says his new fans more than make up for the ones he has lost.
He recently spoke at the Qatar Economic Forum, saying that any politically left-leaning buyers who abandoned the company have been replaced by people who align more with his politics.
He punctuated his point by emphasizing that Tesla has no problem with demand.
But the truth is, European buyers, like American ones, prefer hybrid electric vehicles that run mainly on traditional fuel, but also feature small batteries. Hybrid electric cars account for over 35% of the total European auto market.
Battery electric vehicles accounted for 15% of the market in April.
Tesla shares are resilient, despite roadblocks
Tesla has had a mega rebound since its stock hit the doldrums earlier this year.
While the entire market was reeling from the U.S. trade war that threatened to spill over in April, Tesla shares were hit especially hard.
However, over the last month, the stock has been undefeatable. Nothing, including a dismal first-quarter earnings release, has been able to derail the electric vehicle maker.
Related: Auto industry starting to see first cracks from tariffs
