What does a 45 percent decline in Tesla sales in Europe mean for investors?

In 2025, Tesla's sales in Europe are off to a dreadful start

Are your Tesla shares worth selling, and is Musk's political behavior to blame?

Among the most well-liked stocks on do-it-yourself investing platforms is Tesla. It was last month's third most-purchased investment on Interactive Investor, according to data. Sales of the EV giants' vehicles have plummeted in Europe thus far this year, though, which begs the question: is there less reason to invest in Tesla?

According to the European Automobile Manufacturers Association (ACEA), Tesla's sales in Europe fell more than 45% in January compared to the same month last year. Compared to over 18,000 units a year ago, only 9,945 new units were registered in the region in the first month of this year.

In terms of market share, there are now only 1% of Teslas registered, down from 1.8 percent. Even so, 15 percent of cars registered in January were battery-electric vehicles, up from 10 to 9 percent a year earlier.

According to reports, Elon Musk's politics may be partially to blame. Before serving as an advisor in the newly established Department of Government Efficiency (DOGE), Musk was a key player in US President Donald Trump's campaign.

Supporting the far-right AfD in the 2025 German elections is one of the many scandals that Musk has been involved in. Additionally, Musk has refuted reports that he made a Nazi salute during an event following Trump's inauguration.

Earlier this month, the e-vehicle website Electrifying . com polled 1,000 people and discovered that 60% of them would be deterred from purchasing a Tesla due to Musk's actions and reputation. This covered both present EV owners and those who intended to make the switch in the future.

Additionally, the survey revealed that 56% of prospective customers and 61% of EV owners would be willing to purchase from a Chinese company. According to recent industry data, Chinese automaker BYD is Tesla's biggest rival and appears to be catching up to the company. In 2024, BYD delivered 76 million battery electric vehicles, just a little less than Tesla's 79 million.

Nevertheless, there are other factors that could have had a more significant impact on Tesla's decline in sales. As the upgraded Model Y is expected to be released in the spring, analysts have noted that buyers may be delaying acquisition. In a similar vein, the debut of an updated Model 3 at the beginning of the previous year might have flattened the numbers from the previous year.

In response to the most recent data, Morningstar strategist Seth Goldstein told BFIA: "Auto sales are normally slower in January, but a 45 percent drop from a year ago is probably due to a number of factors. First, since the current Tesla lineup is older, buyers might be holding out for the cheaper SUV that will go into production later this year and the new Model Y.

"Second, we anticipate more competition in 2025 for Tesla-like prices on long-range EVs, which we define as more than 400 kilometers. Compared to previous years, when Tesla's competitors either had a lower range or a higher price, the increased competition at similar range and price points may cause some consumers to choose an alternative. ".

Moreover, since Tesla is still awaiting approval, some buyers might be delaying their Tesla purchases until the EU approves full self-driving technology. I can't say that Elon Musk's political remarks are the main cause of Tesla's poor month, even though they do run the risk of alienating customers.

Is it time to sell your Tesla shares?

Tesla is currently the worst-performing of the Magnificent Seven tech stocks this year, with its share price down more than 20% since the beginning of 2025. After a mixed 2024, it follows. Following Donald Trump's election victory, the stock experienced a spectacular rally after a gloomy start to the year, reaching a new high in December.

Monitor all markets with TradingView Musk's close relationship with Trump played a major role in the stock's surge following the outcome of the US election. Some investors think Musk will use his influence to help shape laws governing autonomous driving, which would remove a major obstacle for Tesla.

Nevertheless, difficulties still exist. With revenues nearly 6% lower than anticipated (£25.7 billion versus estimates of £27.2 billion), Tesla's fourth-quarter earnings fell short of analysts' expectations. Concurrently, earnings per share were £0.66 as opposed to £0.77 as projected.

Due to poor sales and a challenging economic environment, Tesla has been under pressure to lower its prices in order to compete with less expensive options. According to data the company released on January 2, 2024 saw the first annual decline in total deliveries in more than ten years.

Investors are hoping that the promise of a more affordable model in the first half of this year will improve the sales outlook. The fact that Tesla's stock still appears to be highly overpriced, even in the wake of recent share price declines, is one of the biggest risks for investors.

Jacob Falkencrone, global head of investment strategy at investment bank Saxo, wrote about the stock earlier this month: "For the Magnificent Seven, Tesla is still by far the most expensive stock in terms of valuation, trading at about four times the forward price-to-earnings ratio of the average for the rest of the group, even after its recent decline.

Investors are now more concerned than ever that Tesla's valuation is still too high in light of the company's execution risks and slowing growth. Wall Street is still split: according to Bloomberg, about half of analysts believe Tesla is a buy, while the other half advise holding or selling.