Tesla Sales Are Declining Across The World: Is It the Musk Effect?

February 9, 2025February 9, 2025 Shivansh 0 Comments

Tesla, once the undisputed leader in the electric vehicle (EV) market, is facing a tough start to 2025. Tesla Sales figures are dropping worldwide, and analysts are pointing to multiple factors, including decreased EV subsidies, increased competition, and CEO Elon Musk’s growing involvement in politics. Is Tesla’s sales slump just a temporary setback, or does it signal a deeper problem for the company’s future? Let’s dive into the data and explore what’s going on.

New car registration data from the California New Car Dealers Association (CADA) reveals a concerning trend: EV sales in the state remained stagnant at 25.3% of new car sales, only a slight increase from 25% in 2023. While it’s still remarkable that one in four cars sold in California is electric, the overall EV growth slowdown is alarming—especially when looking at Tesla’s numbers.

CADA’s report directly attributes the decline in California’s overall car market to Tesla’s performance:

“All of the decrease in the state market last year was attributable to Tesla, which had an 11.6% decline. Registrations for all other brands increased 1.4%.”

This means that Tesla, once the driving force behind EV adoption, is now dragging the market down.

While Tesla still holds a strong presence in California, with the Model Y remaining the best-selling light truck in the state, sales figures for its vehicles are not encouraging:

The Model 3 saw nearly 30,000 fewer registrations compared to 2023.
The Model Y, Tesla’s top-selling vehicle, dropped by over 4,000 units.
The Cybertruck, which was expected to shake up the market, only managed 9,019 registrations—a disappointing figure in a wealthy, EV-friendly state.

Surprisingly, the aging and expensive Model X had only 434 fewer registrations than the Cybertruck, raising concerns about the latter’s ability to capture market share.

A Global Sales Slump for Tesla

Tesla’s struggles aren’t limited to California or even the U.S.—its sales are dropping significantly worldwide:

Germany: Tesla’s sales plummeted by 60% in January, with only 1,277 registrations recorded. This is a shocking drop in a country that was once a stronghold for the brand.
France: Sales declined by 63% year-over-year in January, indicating that Tesla is rapidly losing ground in major European markets.
United Kingdom: Despite EV sales rising to 21% of the British new car market (a seven-point increase from 2024), Tesla’s sales dropped by 8%. Notably, no Tesla model made it into the UK’s top 10 best-seller list, a significant shift from past trends.
China: Tesla’s biggest market outside the U.S. saw an 11.5% drop in January sales. Considering that China accounts for more than one-third of Tesla’s global sales, this decline is particularly concerning.

Several factors are at play when analyzing Tesla’s declining numbers:

1. Increased Competition in the EV Market

Tesla was once the dominant force in the EV market, but today, more brands are entering the space. Established automakers like Volkswagen, BMW, and Audi are making significant strides in Europe, while Chinese manufacturers such as BYD and NIO are gaining traction worldwide. One key area where Tesla is falling behind is three-row SUVs, a segment in which it currently does not compete.

2. Changes in EV Subsidies

Government incentives have played a crucial role in driving EV adoption. However, several countries have reduced or eliminated these subsidies, making EVs more expensive for consumers. In Europe, Tesla’s sales decline coincides with the removal of subsidies in key markets, leading to calls for EU-wide incentives to counter new imports from China.

3. Factory Upgrades and Model Refreshes

Tesla has been upgrading its Gigafactory Shanghai to prepare for the updated “Juniper” Model Y. These upgrades temporarily slowed production, contributing to lower sales figures. Additionally, sales tend to dip around the Lunar New Year holiday in China, further affecting Tesla’s numbers.

4. The Musk Effect: Politics and Public Perception

One of the most debated factors behind Tesla’s decline is Elon Musk’s increasing involvement in politics. Musk’s outspoken support for controversial political figures and causes has led to a backlash, particularly among traditional Tesla buyers—who tend to be affluent, urban, and politically progressive.

In the U.S., Musk’s recent involvement in President Trump’s efforts to defund government agencies has been widely criticized.
In Germany, Musk’s vocal support for the far-right Alternative for Germany (AfD) has turned off many potential buyers.
In the UK, similar concerns about Musk’s politics have been linked to declining sales.

A report from the EV Politics Project suggests that Musk’s rightward shift is alienating Tesla’s traditional customer base without attracting enough new buyers from the other side of the political spectrum:

“Republicans are creeping toward greater EV acceptance and willing or not, Elon’s journey to MAGA may have helped that. Meanwhile, the Elon-driven Tesla headwinds problem among non-Republican consumers is clearly growing.”

Tesla’s stock initially surged after the 2024 election, with investors optimistic about Musk’s relationship with Trump potentially benefiting Tesla’s business. However, the recent dismal sales figures have caused Tesla’s stock to tumble.

One of the biggest questions of 2025 is whether the updated Model Y (Project Juniper) will be enough to turn things around. The Model Y has been the best-selling EV globally for the past two years, and its refresh includes several improvements in design, efficiency, and comfort. But if Tesla’s sales slump is tied to a broader rejection of Musk and his politics, then even a major update might not be enough to win back lost customers.

Tesla’s struggles are undeniable, and while some factors—such as factory upgrades and seasonal trends—are temporary, others—like increasing competition and political controversies—pose long-term challenges.

Musk’s influence on Tesla is both a strength and a liability. While his visionary leadership has propelled Tesla to the forefront of the EV revolution, his divisive political stance may be pushing away loyal customers. If Tesla wants to maintain its dominance, it may need to refocus on innovation, expand its lineup to include more market segments, and rebuild trust with disenchanted buyers.

The success of the updated Model Y will be a major test for Tesla in 2025. Will it be enough to reignite sales, or is Tesla’s golden era coming to an end? Only time will tell, but one thing is certain—this year will be a defining moment for the future of Tesla.

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