Tesla had a bad start to the year, with sales declining and its stock price plummeting. Many analysts attributed the reason to consumer boycotts caused by CEO Elon Musk's political behavior. However, Bloomberg published an article pointing out that Tesla sales had begun to slow down before Musk really got involved in American politics.. However, his important role in the Trump administration has made Tesla's situation even more difficult.

Musk and Trump

Currently, Tesla's most severe sales decline is occurring in Europe, where sales in the region fell 45% year-on-year in January. In Germany, the situation is particularly severe, with Tesla's new car registrations plummeting 71% in the first two months of this year.This may be because potential buyers are unhappy with Musk’s involvement in the country’s February 23 federal election and are choosing to wait and see.

In China, the world's largest electric vehicle market, shipments from Tesla's Shanghai factory, including domestic deliveries and exports, plunged 49% in February to the lowest level since July 2022. One of the reasons is that the company upgraded the Model Y SUV, which caused the production line to be shut down for several weeks to adjust manufacturing equipment and processes.Still, Tesla has long been at a disadvantage against Chinese rival BYD.Data from U.S. market research firm Kelley Blue Book shows that although Tesla remains the most popular electric car brand in the United States, its market share has declined fromMore than 75% in 2022 dropped to less than 50% in 2024.

Tesla’s U.S. market share is less than 50%

However, Musk's involvement in politics is only the tip of the iceberg of the problems Tesla is currently facing. Bloomberg also listed other reasons for Tesla's sales decline:

Global electric car sales slow

Bloomberg New Energy Finance pointed out that the growth rate of global electric vehicle sales has slowed down in recent years, “but the situation is not the same in various regions.”Some governments have eliminated subsidies. Consumers are hesitant about the relatively high prices and the fact that charging infrastructure remains limited in many areas.

Nonetheless, data from Bloomberg New Energy Finance shows thatGlobal sales of pure electric and plug-in hybrid vehicles rose 24% last year to a record 17.2 million vehicles.The research organization predicts that sales growth will accelerate again to about 30% this year. In Europe, despite Tesla's January sales falling 45%, the industry's pure electric vehicle sales still increased by 37% in January this year.

There is a company whose trend is completely different from Tesla. It is China’s BYD. The company is on a roll, with sales in FebruarySoared 161%, which includes pure electric vehicles and plug-in hybrid vehicles.

Too few models

Regarding Tesla’s model lineup, Musk pursues"It's more about the essence than about the abundance"concept.

Currently, Tesla only sells five models: Model S (launched in 2012), Model Also, not all models are sold globally.The Model 3 sedan and Model Y SUV alone accounted for more than 95% of Tesla's global deliveries last year.

Model YBy comparison, BYD offers a wider variety of models (the exact number varies by country), most of which cost less than Tesla's most popular models. In addition, BYD has announced the development and testing of aCharging for 5 minutes and a range of 400 kilometersof electric vehicle battery systems, which may further enhance its competitiveness.

Threat from new adversaries

At the same time, Tesla is facing increasing competition from new entrants. Xiaomi, for example, is expanding from the mobile phone industry into car manufacturing, posing a threat to Tesla in the already competitive Chinese electric vehicle market.

How much influence do political factors have?

Musk has close ties to Trump and the Republican Party, and the clearest sign that this relationship is dragging down Tesla comes from California, a Democratic stronghold. Last year, Tesla registrations in the state dropped by four quartersAll declined.

Since the election, boycotts of Tesla have grown in the United States and Europe. A decentralized movement called "Boycott Tesla" has emerged, with people protesting outside Tesla showrooms across the United States and organizers calling for a boycott of the company's products. Tesla has also suffered a showroom vandalism in the Netherlands, an arson attack in France and a hotly debated prank at a factory in Germany.

Trump defended Musk on March 11 this year, when he took a photo with several Tesla cars at the White House and promised to buy a Model S. It's unclear whether support from Trump and right-wing figures like Sean Hannity, Alex Jones and Ted Cruz will attract more customers to Tesla, offsetting any losses it might lose from the left.

How to reverse the decline?

Tesla is launching a redesigned version of Model Y, saying it includesNew models including more affordable versionsProduction is scheduled to begin later this year, but details about these cheaper models are still scarce.

Musk has increasingly bet Tesla's future on self-driving cars and robots. The company said it plans to start mass production of a car without a steering wheel and pedals called Cybercab in 2026.Musk also hopes to start delivering a humanoid robot called Optimus to other companies starting next year.

What worries some analysts is that Tesla's deliveries may drop again this year, with no clarity on what the company can offer customers in the meantime. Investors are also increasingly skeptical that Tesla will not make major adjustments to its product line in the short term, but is more likely to justLaunch lower-priced versions of existing models.