Tesla Faces Unprecedented Sales Decline amid Growing Competition

By Evans Momodu
2 minute digest
Published 12:39 UK(GMT) 18 February, 2025

Tesla is experiencing a significant global sales decrease, with the ev market competition rapidly closing the gap. While many factors are at play, it remains uncertain whether the polarising political stance of CEO Elon Musk is a contributing factor.

For the first time in its history, Tesla recorded a global sales decline in 2024, with a 1% drop compared to the previous year. While this may seem minor for some companies, it marks a stark contrast to Tesla’s previous growth rates of 38% and 40% in the prior two years.

The company’s soaring stock value over the last decade has largely depended on continued expansion, making this decline particularly noteworthy.

In the U.S., Tesla’s sales fell 16% between December and January—though this trend aligns with its usual pattern of a strong year-end sales push followed by a dip at the start of the new year. For instance, in January 2024, Tesla’s sales were down by 24% compared to December 2023.

However, the company’s challenges extend beyond Musk’s political involvement and his commitments to multiple ventures. Industry experts suggest that attributing Tesla’s struggles to a single cause is difficult.

“It’s still too early to determine whether Musk’s political stance is directly influencing Tesla sales,” said Stephanie Valdez Streaty, Director of Industry Insights at Cox Automotive. “We can’t conclusively say that polarisation is driving people toward or away from the brand.”

A significant shift in consumer interest is evident in data from S&P Global Mobility, which analysed Tesla’s retention rate among previous owners in Democratic-leaning "blue states" versus Republican-leaning "red states."

In blue states—those that voted Democratic in the last four presidential elections—the percentage of repeat Tesla buyers dropped from 72% in late 2023 to 65% in late 2024. In contrast, repeat buyers in red states saw a slight increase from 47.6% to 48.2% over the same period.

This decline in loyalty among blue-state Tesla owners contributed to an overall 1% drop in Tesla’s market share in key regions, including California, one of the largest car markets in the U.S.

Some anecdotal evidence suggests Musk’s political activism may be influencing consumer sentiment. A recent Morning Consult survey found that nearly 32% of U.S. consumers would not consider buying a Tesla, up from 27% in 2023 and 17% in 2021.

However, the percentage of buyers actively considering Tesla has remained steady at around 16% over the past four years.

Meanwhile, public perception of Musk has worsened significantly. A January Quinnipiac University poll found that 53% of voters disapprove of Musk's involvement in the Trump administration, while 39% approve.

This is a notable shift from December 2022, when public opinion on Musk was more evenly split, with 36% holding a favourable view and 35% expressing a negative opinion.

Tesla’s future remains uncertain as it navigates a shifting market landscape, increasing competition, and the evolving public perception of its CEO.
Source: CNN