Tesla Losing Steam in Europe: What's Impeding Its Growth?

Core Insights - Tesla's car sales have experienced significant declines in several European countries for five consecutive months, attributed to CEO Elon Musk's political controversies and an aging vehicle lineup [1][10] Sales Performance - In Sweden and Portugal, Tesla's new car sales fell by 53.7% and 68% year over year, respectively, while overall EV sales in those countries increased by approximately 25% [2] - Tesla's sales also dropped by 30.5% in Denmark, 36% in the Netherlands, 19% in Spain, and 67% in France [2] - Conversely, Norway saw a remarkable increase in Tesla sales, which surged by 213% in May, driven by the introduction of updated Model Y SUVs [3][10] Product Availability and Demand Stimulation - The new Model Y is available for order in many European markets, but deliveries of the most affordable variant are only expected to begin this month in countries like Germany, the UK, France, and Italy, affecting May's sales data [4] - To stimulate demand, Tesla has been offering various financial incentives in Sweden, Germany, Britain, and France, as well as interest-free loans for the new Model Y in Norway [5] Competitive Landscape - BYD Company Limited, a Chinese EV maker, saw a 359% year-over-year increase in total sales in Europe in April, surpassing Tesla's EV sales for the first time [6] - Volkswagen AG gained 1.1% market share in Europe in April 2025, leading the European EV market, with notable growth in its subsidiaries Skoda and Audi [7] Financial Performance and Valuation - Tesla has underperformed compared to the Zacks Automotive – Domestic industry and the Auto, Tires and Truck sector year to date, with a loss of 15.1% compared to the industry's decline of 14.2% and the sector's decline of 9.6% [8] - The Zacks Consensus Estimate for Tesla's EPS has decreased by 13 cents and 16 cents for 2025 and 2026, respectively, in the past 30 days [11] - Tesla appears overvalued based on its price/sales ratio, trading at a forward sales multiple of 10.56, significantly higher than the industry's 2.77 [12]