Sales are dropping across the world's three biggest markets: Europe, China and the US. In Europe, yesterday the ACEA announced that Tesla registrations fell by 48.5% y-o-y in October. Since the start of the year, they are down 30%, even with the electric-vehicle market having grown by 26%. In October, the American group's market share slipped to 0.6%, with under 7,000 Teslas sold across Europe (EU, EFTA, UK).
Global Tesla sales are expected to decline by 7% in 2025, after an initial 1% drop in 2024, according to Visible Alpha - and this is despite a record Q3, boosted by a rush of US buyers ahead of the expiry of a tax credit. In Europe, sales are still suffering from calls for a boycott that erupted at the end of 2024 after Musk publicly backed far-right figures. Even though he has kept a lower profile since then, a rebound has yet to materialise. Analysts point to an ageing line-up facing a broader, often cheaper, competitive offering.
An ageing line-up
The situation in Europe is critical. Over a dozen electric models there sell for under $30,000, while Chinese brands are pouring in with boldly designed vehicles and a wide range of options. Tesla only offers two mass-market models in the region: the Model 3 and Model Y. An entry-level Model Y was launched to revive sales, with little effect. In October, China's BYD sold more than twice as many vehicles as Tesla. Volkswagen, which has long struggled to keep up, has seen its EV sales soar 78.2% this year to 522,600 units, three times Tesla's total (180,688). "The problem for Elon Musk is not just his cars or the Chinese brands," sums up Ferdinand Dudenhoeffer of the University of Duisburg-Essen. "The problem is that Europeans have caught up".
In China, Tesla's sales fell 35.8% in October and are down 8.4% for the year. The market is awash with fast-moving local brands such as Chery or Xiaomi, whose YU7 is overshadowing Model Y. In the US, after a peak in September (+18%), sales plunged 24% in October. With some rivals such as General Motors, Ford or Honda slowing their electric investments, Tesla could well benefit. The launch of cheaper versions of the Model 3 and Y could also help it defend its market share. However, with no new model on the horizon, as instead Musk focuses on robotaxis and humanoid robots, the outlook remains uncertain.
A stock trading at 327 times 2025 earnings
For now, investors are clinging to the idea that cars are not necessarily Tesla's future - at least not its main one. The share price is still up 4% this year. This is less than the broader market (15% for the S&P 500 and 19% for the Nasdaq 100), although is striking given the company's poor commercial performance and weakening results. The company's P/E multiple climbed from 34x in 2022 to 198x in 2023. It is expected to rise to 327x this year, and to fall only to 221x in 2026 and 148x in 2027, according to analysts. Such multiples would be justified only by strong growth - something hard to imagine in the current environment.
