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In May, electric vehicle maker Tesla (TSLA) posted a huge sales decline in many European countries, continuing a string of monthly shortfalls since January that have drawn significant attention. But management hopes that a refreshed Model Y, the company’s top-selling vehicle, will help sales rebound. And while Tesla has seen a lot of negative press in Europe, it’s also feeling the pinch in China, as homegrown EV makers ramp up the pressure on CEO Elon Musk and company.
Add it all up — and tack on a surprisingly resurgent stock — and investors may be asking where the value is.
Tesla’s May sales go away
Tesla’s May sales figures across Europe looked dismal — much like April’s sales numbers — with one curious exception:
- Sweden: -54 percent
- Portugal: -68 percent
- Denmark: -31 percent
- The Netherlands: -36 percent
- Spain: -19 percent
- France: -67 percent
Meanwhile, in Norway, Tesla sales were up an astonishing 213 percent year over year in May. One key difference: Norwegian buyers have begun receiving the refreshed Model Y, while the model will only start to be delivered in major countries such as Germany, Italy, France and Great Britain in June.
So the current month may prove to be particularly interesting in determining how tarnished the Tesla brand is due to the political activities of CEO Elon Musk and how much of its sales decline is due to a dated Model Y. Musk has been part of the Department of Government Efficiency (DOGE), which has cut vital U.S. government programs. He has also endorsed far-right European politicians, triggering backlash against Tesla in the U.S. and Europe, including protests and vandalism.
But Tesla seems to want to take no chances with the launch of its updated Model Y, as the company is reportedly offering financial incentives for the car in major markets, including France, Great Britain and Germany. Meanwhile, buyers in Norway can enjoy interest-free financing.
The incentives, of course, will hurt Tesla’s margins, already at relatively thin levels, but they also seem to suggest a company that desperately needs some positive press. While Tesla’s sales in Europe have flagged to start 2025, those of rivals have continued to surge, including China’s BYD, indicating that Tesla is losing market share. Incentives help fix this — at a cost.
But there’s more going on in Norway, according to a recent study from the Norwegian School of Economics. The country incentivizes EV purchases with a ton of perks, such as lower sales taxes and lower fees for parking and roads, says CNBC. This cocktail of benefits may make Norwegian buyers more likely to fork out cash to Tesla and other EV companies.
Tesla’s problems extend beyond Europe
Tesla’s sales declines in Europe and Musk’s foray into politics have captured a lot of attention to start 2025, but the company’s problems may run much deeper. Musk’s political involvement has undoubtedly hurt Tesla’s brand, though the key questions are how much and for how long. But the company’s image is also falling in China, Tesla’s second-largest market, and one that accounted for 40 percent of sales in the first quarter.
A recent report from Swiss investment bank UBS suggests that Chinese buyers now place Tesla in the third spot as their top EV brand, behind domestic rivals BYD and Xiaomi. Tesla’s rating as a top EV choice in China fell from 18 percent a year ago to 14 percent this year. That said, the survey also found that Tesla was rated the best of the foreign EV manufacturers.
But the decline in Chinese perceptions is also echoed globally, with the survey suggesting that 36 percent of consumers would consider buying a Tesla, down from 39 percent in 2024. And it’s not just abroad where Tesla’s brand is feeling squeezed. The UBS survey also shows that Tesla fell as a top choice among U.S. consumers, from 38 percent last year to 29 percent this year.
Those figures suggest a brand that is poised to lose its image as the preeminent EV maker. No doubt, Tesla can continue to grow its sales in absolute terms as long as the EV market as a whole continues to expand briskly. But the sales results and this latest brand survey suggest that Tesla’s dominance of the subsector seems to be waning.
So it may be less surprising that Tesla’s board of directors — recently rumored to have hired an executive search firm to find a replacement for Musk — have now reportedly decided to stick with a leader who has powered them through plenty of tough spots before. In fact, Tesla is reported to be preparing a massive pay package in case Musk doesn’t receive a previously agreed-to pay package that’s been overturned by a Delaware court.
All the sales news, plunging brand perception and the massive valuation underlying Tesla’s stock should give investors plenty of pause. The shares have rebounded significantly in the last couple of months, following a more than 50 percent decline from the stock’s all-time high in December, making it a riskier proposition than just weeks ago, as the bad news keeps coming.
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