What the hell is going on at Tesla?

“I’m going to buy a brand-new Tesla to show my confidence and support for Elon Musk, a truly great American,” US President Donald Trump said recently about the South Africa-born entrepreneur, following a plunge in the company’s share price.

The next day, on 11 March, the South Lawn of the White House was turned into a temporary Tesla showroom, with Trump calling the vehicles “beautiful” on camera, and paying particular praise to the outlandishly designed Cybertruck. He plans to eventually buy a red Model S.

Trump may claim to love Musk’s ‘baby,’ but some do not. Tesla shares dropped 15% on 10 March – its worst day on the market since September 2020. This sharp decline comes amid criticism of the Tesla CEO, and his ties to right-wing figures, including British anti-Islam campaigner and far-right activist, Tommy Robinson, and the Alternative für Deutschland (AfD) party in Germany.

But is it truly all doom and gloom for Tesla because of Musk’s antics and his controversial relationships? It’s much more nuanced than that.

Year-to-date, Tesla’s stock has seen a significant 30% decline, making it the second-worst-performing stock in the S&P 500 index. This downturn is due to a range of factors – not just the frequent bad press surrounding Musk. These include increased competition, production challenges, and broader economic pressures.

Tesla’s shares peaked in December after Trump’s win but have since lost over $800bn in value. The stock has fallen for seven straight weeks, the longest losing streak since its stock launch, wiping out all the gains it enjoyed following Trump’s election.

Where are the Tesla sales dropping?

Tesla’s biggest sales slump comes from Europe, where its once-dominant position is now under pressure.

In Germany alone, sales plunged 76% compared to February 2024, with just 1,429 units sold, according to the German Federal Motor Transport Authority. Tesla’s decline in the country is even more pronounced when you consider that in February 2025, 35,949 electric vehicles overall were newly registered in Germany – 30.8% more than in the same month last year.

It’s not certain if there’s a direct correlation between Tesla sales dropping in Germany and Musk’s known support for Germany’s AfD, as sales have been declining over the past year. However, sales dropped exponentially once Trump rejoined the Oval Office. It’s hard to ignore this when overall EV sales are up across the country.

Other countries in Central Europe and Scandinavia also saw sharp declines: the Netherlands dropped by 24%, Sweden by 42%, Norway and Denmark by 48%, France by 45%, Italy by 55%, and Portugal by 53%. Even Spain, a more stable market, saw a 10% dip.

This downward spiral isn’t just confined to Europe. In Australia, the situation is even bleaker, with sales plunging by 72% in February compared to the previous year. Many Tesla owners down under are offloading their EVs or using bumper stickers to distance themselves from the carmaker.

A significant factor behind this decline seems to be the polarising effect of Musk. His outspoken political views have raised eyebrows in markets where Tesla has typically attracted a progressive, eco-conscious audience.

In fact, sales in Europe had already dropped by 45% in January, suggesting that Musk’s political stance may have played a role in alienating some customers, further driving this decline.

Other factors behind the decline

Tesla is also facing heightened competition from domestic EV manufacturers, especially in China. Tesla shipments dropped by 49% in February from a year earlier, largely due to the rise of BYD, a local EV company that has gained significant traction. This has put intense pressure on Tesla, whose dominance in the Chinese market has long been a cornerstone of its global strategy.

Another big factor to this decline in sales is that Tesla’s shares were arguably way overpriced from the start.

Right after the US presidential election, Tesla’s stock shot up by 32%, adding $250bn to its market value. To put that into perspective, that’s the same as the entire value of Toyota, the second-largest carmaker in the world.

At its peak, Tesla’s shares were trading at 112 times expected earnings – way higher than the S&P 500, which was around 25 times, and even higher than Tesla’s own five-year average of 93. For comparison, Ford’s shares are valued at only eight times its expected earnings.

This sky-high valuation came from the huge growth expectations people had for Tesla, especially with Musk’s promises of a budget electric car and a fully self-driving ride-hailing service.

Another worry is that Tesla’s main business operations might be facing issues. In January, the company reported a 23% drop in operating profits for the last quarter of 2024 compared to the same time the previous year. Tesla attributed this decline to lower average selling prices across its Model 3, Model Y, Model X, and Model S vehicles.

Overall, new vehicle deliveries for the year were down compared to 2023, marking the first year-on-year decline the company has experienced.

It’s not all doom and gloom though

However, all is not lost for Tesla. Despite the struggles across much of Europe and other international markets, the company is still seeing growth in certain regions. In the UK, Tesla sales jumped by 21% in February, with 4,000 Teslas sold, defying the broader European trend.

Meanwhile in Ireland, Tesla is bucking the downward trajectory altogether, with sales surging by over 30% so far this year. This shows there’s still a strong appetite for Teslas in some markets.

People in the UK and Ireland continue to buy Tesla’s because of strong demand for EVs as buyers look to beat a new tax on expensive cars that comes into force in April. The Model 3 and Model Y have also proven to be the second and third most popular car after the Mini Cooper, according to the Society of Motor Manufacturers and Traders (SMMT).

Ultimately, Tesla’s future may hinge on its ability to balance Musk’s polarising persona with the need to appeal to an increasingly competitive global EV market. While setbacks in Europe and Australia are concerning, the growing success in places like the UK and Ireland give hope that the brand can weather the storm, granted it can regain customer loyalty and adapt to the changing market.