Tesla’s Slumping Sales: What Happened?

Written by Humairah Khokhar

Introduction

In July 2003, Tesla, originally named Tesla Motors, was founded by 2 engineers, Martin Eberhard and Marc Tarpenning. Their aim was to engineer and mass produce electric vehicles: vehicles that are fully powered by electric motors, rather than fossil fuels.

In February 2004, Elon Musk invested $6.5 million in Tesla during its Series A funding round, becoming the company’s largest shareholder. In the same month, his sizeable interest in the company resulted in him becoming chairman of the Board of Directors. In October 2008, he became CEO. In May 2009, Martin Eberhard filed a defamation suit against Elon Musk for claiming to be the founder of Tesla, but this was settled outside of court by September. Tesla released a statement after the settlement, referring to Martin Eberhard and Elon Musk as ‘two of the co-founders of Tesla’.

As of 2025, Elon Musk’s name is synonymous with Tesla. Elon Musk fostered a significant global interest in the company, attracting investment from several prominent sources, including: Google co-founders Larry Page and Sergey Brin; JPMorgan Chase’s Bay Area Equity Fund; and former eBay president Jeff Skoll. He has overseen the release of several vehicles, most recently the redesigned Model Y. It is clear that Elon Musk’s efforts have, to date, bolstered Tesla’s value.

However, that value is in jeopardy. According to Reuters, Tesla’s 2025 sales in Europe have dropped for 4 consecutive months. This has happened despite sales of fully-electric vehicles in Europe rising by 28%. In April 2025, sales in Sweden dropped 81%, France dropped 59.4%, and the UK dropped 62%. This decline has been attributed to several factors, including: Elon Musk’s political activities, which have proved largely unpopular with his consumer base; delayed vehicle releases, which have caused Tesla to be seen as unreliable and increased competition from Chinese electric vehicle manufacturers, such as BYD, contributing to a crowded market.

Elon Musk’s Involvement

Elon Musk’s political activities have been widely reported on. Per Forbes, in February 2025, Elon Musk showed support for Germany’s far-right Alternative for Germany party, just one day before Germany’s general election. He posted ‘AfD!’ alongside German flag emojis, and reposted an inflammatory tweet. In January 2025, Elon Musk appeared at an AfD virtually rally, telling the crowd that Germany should ‘not lose [German values] in some sort of multiculturalism that dilutes everything’. He also added that Germany places ‘too much focus on past guilt’, likely referencing Germany’s history of Nazism. His inflammatory, discriminatory views have not been well-received, arguably contributing to declining Tesla purchases. Elon Musk’s name is synonymous with Tesla, thus any reputational damage that Elon Musk personally faces would contribute to Tesla’s decline. International protests have commenced outside several Tesla dealerships, with people gathering in the US, UK, Canada, France, Germany, and Portugal. A social media campaign dubbed ‘#TeslaTakedown’ has brought further attention to the brand’s damaged popularity. However, this is not the only factor that has caused Tesla’s decline.

Elon Musk has also consistently failed to deliver on his promises, resulting in delayed releases and increased frustration from investors and consumers alike. His increased time spent as a political advisor within Department of Government Efficiency (DOGE) to President Donald Trump has arguably worsened matters, as investors believe his focus is split between the company and political commitments. The latest example of this occurred when Tesla delayed the US launch of a lower-cost Model Y until 2026, after originally planning for an early-2025 release. Elon Musk has discussed stepping back from his role in DOGE, likely to focus on Tesla’s improvement after accusations that he has ‘taken his focus off’ the company. Through targeting a more affordable place in the market, Tesla could have developed their consumer base, thereby increasing interest in the brand. Therefore, delaying the release allowed other brands to capitalise on those potential sales at Tesla’s expenses.

Also, the Tesla website promises ‘autonomy for all…through the creation of a fleet of autonomous vehicles and robots’. In late-2024, Elon Musk promised self-driving taxis, which he deemed ‘robotaxis’. He has not delivered on this promise, contributing to a noticeable, negative pattern of behaviour that has caused concern in consumers and investors alike. Meanwhile, Waymo, originally known as the Google Self-Driving Car Project, has fulfilled this goal. They offer self-driving vehicles in San Francisco, Los Angeles, and Phoenix, and plan to expand their operation in other US cities.

Waymo is not without their problems: this month, they have recalled 1212 of their 1500 vehicles due to minor collisions. Nevertheless, they have exceeded in delivering functioning, self-driving taxis, and they are actively improving their model. This starkly contrasts Tesla’s limited progress. Notably, in March 2025, the New York Times reported that Robyn Denholm, Tesla’s board chair, sold $198+ million over the last 6 months, signifying a lack of faith in Tesla’s ability to circumvent competition and progress in the market.

International Competition

In October 2023, the BBC reported that BYD, a Chinese electric vehicle car manufacturer, was Tesla’s ‘rival in its rear-view mirror’. As of May 2025, BYD has seen rapid growth in the European markets. Although they only started selling in the European markets in 2020, BYD already offers 6 designs in the UK, challenging Tesla’s limited range of 2 models. This competitive advantage has been partially shaped by BYD, and other Chinese manufacturers, benefitting from Chinese government subsidies. In 2024, this resulted in the European Commission imposing tariffs on Chinese electric vehicles. In April 2025, this decision was reversed: it was announced that the European Union and China will set minimum prices of Chinese-made electric vehicles instead. This compromise bodes well for BYD’s expansion, reducing their barriers to international trade.

In May 2025, Foxconn, the Taiwanese iPhone supplier, announced that they are in discussions with Mitsubishi Motors, a Japanese automaker, to manufacture electric vehicles. They will initially be targeting the Australian and New Zealand markets, with expansion plans underway. Foxconn’s venture into electric vehicles will pose strong competition for both Tesla and BYD. In 2022, the Financial Times interviewed Liu Young-way, Foxconn’s chief executive, who spoke on Foxconn’s ambitions. He stated: ‘Foxconn is not in the business of selling its own EV brand. I hope one day we can do Tesla cars for Tesla.’ That mindset has shifted significantly, arguably signifying Tesla’s declining dominance.

To preserve their position in the market, Tesla requires a strong leader. Professor Peter Wells, director of Cardiff University’s Centre for Automotive Industry Research, stated: ‘We’ve not seen the level of innovation in terms of [Tesla’s] product range that perhaps Elon Musk should have been looking for. I think that is a big part of their problem.’

Conclusion

Electric vehicle sales continue to grow, signifying a clear consumer interest. Where other companies are capitalising on this opportunity, Tesla is seemingly stagnating (especially in the European market). It remains to be seen whether Elon Musk’s involvement will help or hinder the company’s development.

Bibliography

Tesla’s Slumping Sales: What Happened?

Rahman v Hassan & Ors [2024] EWHC 1290 (Ch)

Imran Chaudhri

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