25/02/12
Tesla sales slump on ageing line up, competition
London, 12 February (Argus) — US firm Tesla's electric vehicle (EV) sales have
continued to fall this year — but as a result of structural factors, such as
increased competition, duties and the arrival of Chinese carmakers in the
market, and not because of chief executive Elon Musk's public profile, market
participants have told Argus . Tesla's European sales fell by 11pc in 2024,
having risen by 56pc in 2023 (see graph) . In January 2025, Tesla's sales fell
by 63pc on the year in France, 59.5pc in Germany, 44.3pc in Sweden, and 37.9pc
in Norway. The smaller 7.8pc fall in the non-EU UK could be explained by the
different tariff regime. Some Tesla models sold in Europe are manufactured in
Shanghai, and the UK has decided not to impose tariffs on Chinese-made EVs,
while the EU imposed a 7.8pc duty on Tesla's Chinese-made EVs in October. Demand
for Teslas in the UK, France, Germany and US began to decline in April last
year, according to Ben Marks, founder of Electrify Research. Marks also pointed
to "notable drops in July and October, by which time Tesla had fallen from the
first to fourth-placed brand — trailing Audi, BMW and VW". According to a survey
conducted last month by car testers Electrifying.com, of 455 non-EV drivers,
56pc would be happy to buy Chinese, while 59pc have been put off buying a Tesla
by the public profile of chief executive Elon Musk, although some market
participants pointed to other problems. "Tesla's problems are likely not to do
with British motorists' perceptions of Elon Musk, and more to do with the fact
that Tesla haven't released a new car since the Model Y, while its competitors
have been playing catch-up," independent transport research organisation New
AutoMotive's chief executive, Ben Nelmes, said. And with Chinese EV makers now
in Europe, and over 130 mainstream EV models available in the UK, "competition
has never been fiercer", Electrifying.com chief executive Ginny Buckley told
Argus . "[Tesla's] dominance is no longer guaranteed." Meanwhile, Slovakian
battery maker InoBat's vice-chair, Andy Palmer, said Tesla "needs to think long
and hard about its positioning and product offers if it wants to stop bleeding
market share". Tesla models also rely on production of a battery chemistry that
is increasingly concentrated in China (see graph) . Standard-range versions of
Tesla's best-selling Model 3 and Model Y both use lithium iron phosphate (LFP)
batteries, rather than premium nickel-cobalt-manganese-based (NCM) batteries.
And while input costs of LFP-based EVs have edged down to a discount to
NCM-based EVs (see graphs) , domestic LFP production has enabled Chinese
carmakers such as BYD to sell their models at prices that are increasingly
competitive with Tesla . Tesla better placed to cope than legacy carmakers
Tesla's Model Y is still comfortably the best-selling EV model, according to
research firm Jato Dynamics. "One of the things with car sales, particularly
retail sales — it's not logical, otherwise everyone would drive a Toyota
Corolla. People drive the new shiny things. Tesla used to be the shiny thing
with the Model Y, but not so much now," the founder of ratings service The Car
Expert, Stuart Masson, told Argus . Until recently, Tesla "showed you don't have
to make design changes for the sake of it" according to Masson, going against
prevailing wisdom. Tesla's cars often still topped ratings for safety, battery
efficiency and technology after 3-4 years on the road. Tesla is "better placed
to cope" with Chinese competition because it "doesn't have a lot of legacy
infrastructure", Masson added. The firm has never had dealers, as conventional
carmakers have, or big showrooms that require steady monthly sales. Instead, it
operates its own showrooms and interacts with customers directly over the
internet, cutting out the middleman used by established dealer networks.
Volkswagen, by contrast, "can't sack anyone in Germany because of the unions and
local government that have seats on the board; they veto any attempts", Masson
said. "It's haemorrhaging money, and it knows full well that most expensive
factories are in Germany, but it can't get rid of them." Volkswagen Group's
operating profit dropped by 42pc on the year to €2.9bn in the third quarter of
2024 and its operating margin was just 3.6pc. Tesla also makes a much bigger
profit from EVs than any western car company, so it can better afford to reduce
prices. The firm is also now much more than just a carmaker, Masson added,
having launched an energy storage gigafactory in Shanghai this week. "From cars
to battery storage, superchargers, robo-taxis and robo-vans, they've launched
several concepts that have never gone to production, but they tend to find their
feet in every market," Masson said. "I think it will still be okay, but we're
not going to see continued growth of 100pc per year … I think there are a lot of
car companies that are in far more trouble." By Chris Welch Tesla annual BEV
sales in Europe China monthly battery production GWh NCM EV input material price
model $ LFP EV input material price model $ Send comments and request more
information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All
rights reserved.