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Key takeaways
Tesla’s sales are falling in key markets such as Europe, China and the United States, despite growing EV sales across the sector.Rising competition from established carmakers and emerging Chinese brands is challenging Tesla’s dominance of the market.Elon Musk’s focus on projects such as robotaxis and autonomous humanoid robots is drawing attention away from Tesla’s weak passenger car line-up.
Tesla’s core business, selling cars, is coming under mounting pressure. The electric-vehicle maker has seen its sales drop significantly in key markets such as Europe, China and the United States. In Europe, Tesla’s sales fell by almost 50 percent in October compared to the same month last year. This downward trend reflects a broader problem for Tesla, as EV sales across the industry have risen.
Challenges for Tesla
Analysts attribute Tesla’s problems to several factors. The company’s limited model range has become dated compared with the growing number of competing EVs available at lower price points. In addition, Tesla’s European operations have yet to recover from the controversy over Elon Musk’s public statements last year.
Tesla was once at the top of global EV sales, but now faces fierce competition from established car manufacturers and rising Chinese brands. Volkswagen, for instance, has seen a strong increase in EV sales and is beating Tesla’s numbers in Europe. In China, Tesla is struggling with the resurgence of domestic brands such as Chery and newcomers like Xiaomi, whose YU7 model competes directly with the Model Y.
US market
Despite strong US sales in September, fuelled by expiring tax incentives, there was a sharp decline in October. The outlook for the US electric vehicle market remains uncertain. While some analysts believe Tesla could benefit from other carmakers cutting back EV production, others argue that a new car model is crucial to boosting sales.
Elon Musk, however, currently seems more focused on robotaxis and autonomous humanoid robots than on expanding Tesla’s passenger car line-up.
Musk’s compensation plan
Musk’s recently approved compensation package is not tied to substantial revenue growth. He can unlock significant financial rewards if Tesla maintains an average annual production of 1.2 million vehicles over the next ten years, a figure that is lower than its 2024 sales.
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