Tesla's sales and shares are slumping. Are Elon's antics to blame?

Independent

26-02-2025

Tesla has emerged from the latest European car registration numbers looking like a mangled wreck at the side of the road.
Across the continent, the EV maker's sales slumped by 45 per cent in January, according to the European Automobile Manufacturers' Association (ACEA). This begs the question: could the politics of Elon Musk, CEO and chainsaw-wielding head of the Department of Government Efficiency (DOGE), be hitting the bottom line?
Well… it's complicated.
For a start, Tesla's popular model Y has undergone a redesign, which is the sort of thing that inevitably hits sales: people who buy pricey new cars usually want the most up-to-date model sitting on their driveway, so would be prepared to buy later.
This delay has clearly had an impact. Tesla has also faced increased competition from other makers that produce smart, attractive EVs at what can be more competitive prices.
'Tesla's car sales fell year-on-year for the first time in more than a decade in 2024 and the early 2025 numbers from key markets like California and the EU look worse still,' said Russ Mould, from broker AJ Bell. "Whether this is down to wider slowdown in EV sales, stiff competition from BYD and other Chinese rivals or a buyers' strike because of Mr Musk's high-profile politics is hard to divine.'
It's quite possible, even probable, that they're all playing a role.
When I asked Fleet Alliance, a fleet management company which looks after more than 30,000 vehicles for business customers, whether they had seen an impact, the company said Tesla remained 'at the top of our order bank'. The Model 3 topped its sales charts in 2024, with the Model Y in second place for the second year in a row.
However, business customers may be less sensitive to brands and the eccentric activities of CEOs so long as the product and the terms offered to them remain good. That's the case with Tesla.
'Both models offer benefits in terms of low monthly rentals and BIK (Benefits In Kind) rates which really appeal to our customers,' said CEO Andy Bruce, by way of explanation.
But individual buyers may take a different view.
'It's no surprise that a brand so closely tied to its founder and main visionary is affected by the actions and ideas of its leader, for better or worse. The relationship between a brand and an associated celebrity has always been a double-edged sword,' said Gabor Schreier, chief creative officer at branding and design agency Saffron Brand Consultants
'In the automotive industry, facing massive transformation, global uncertainty, and intense competition, a brand like Tesla is particularly exposed.
'It's striking to see how quickly Tesla's customer base is reacting. Electric mobility is not yet for everyone, and people buying Tesla's may be more closely aligned with ideas that don't necessarily reflect what is dominating international headlines. A costly product like Tesla depends on audiences willing to invest in it, and those buyers often want to identify with the product, whether as a status symbol or a statement for progressive thinking.'
So far, it's worth noting that the UK sales have declined by much less than in Europe. The Society of Motor Manufacturers here, which contributes to the ACEA figures, found sales in January fell by just 7.8 per cent. It seems that Musk's UK fans are more solid than their European peers.
But Shreier's point makes a lot of sense. Tesla has clearly benefited from its powerful brand and been seen as a status symbol among EV drivers, in the same way as marque brands like Mercedes or Audi have been seen by petrol engine drivers in years past.
Whether it still retains that is now open to question. Musk's deliberate seeking out of controversy, his provocations and his public statements stand in stark contrast to the way other big ticket CEOs of America's mega-cap tech businesses behave.
It's not that the likes of Apple's Tim Cook, Alphabet (Google) boss Sundar Pichai, Meta's Mark Zuckerberg or Amazon founder Jeff Bezos don't have opinions. They do. And they aren't shy about making them known.
Zuckerberg went so far as to appear on Joe Rogan's podcast, talking of the need for the company to have more 'masculine energy'.
However, as a rule, tech bosses' views tend to be closely aligned to the interests of their businesses, and they are far more cautious and strategic in the way they voice them than Musk.
Zuckerberg's statements, accompanied by the elimination of some safeguards over what had been perceived by some as 'hate speech', might have been cringeworthy. But they clearly had an aim in mind.
President Trump and his supporters have been highly critical about what they see as censorship of conservative views and voices on social media. Zuckerberg's musings and his business moves were clearly aimed at heading off any possible blowback and cosying up to the White House. It isn't the first time Zuckerberg has said something cringey. But he is much less inclined to shoot from the hip, as Musk does.
Wall Street will now be watching. Tesla's shares went on a tear following Trump's election as investors got excited about Musk's status as the US president's BFF. But recently they've been surrendering those gains, losing nearly a quarter of their value over the past month.
The sales data only exacerbated that.
'The harsh reality is that 2024's operational results were terrible as net profits more than halved,' said Mould. However, the shares still sit on a fancy valuation which those results do not justify.
'Tesla needs to generate some rapid growth and some earnings forecast upgrades, and quickly – something which its many supporters will say it has done before, more than once,' he added.
This is true. But it's tough to pull off repeatedly even with a fully engaged CEO who doesn't prance around with a chainsaw at the Conservative Political Action Conference (CPAC) with the aim of 'owning the libs '.
Tesla investors pay Musk billions for what looks like a part-time job. There are a lot of fanboys among them who worship the ground he walks on. But they may find their ardour cooling if their shares continue to act like an EV with a flat battery.