As U.S. electric-vehicle maker Tesla struggles, including its first annual revenue decline since listing, an analysis said the reason for Tesla's slump is not solely Chief Executive Elon Musk's political moves.
Last year, Tesla's global vehicle deliveries were about 1.6 million, down 9% from the previous year, and its sales in the United States, Tesla's home market, fell 7%. In particular, because Tesla's sales, profit, and vehicle deliveries all declined in the first half of last year when Musk served in the Trump administration, industry observers cited Musk's political activity as a cause of Tesla's slump.
However, on the 5th (local time), Bloomberg News reported, "Behind Tesla's troubles are reasons far more complex than simple antipathy toward Musk." It said Musk's political activity has indeed had a negative impact on Tesla, but the slump is the result of a combination of factors.
First, the global EV market is slowing. According to BloombergNEF, global EV sales this year are expected to rise 12% from a year earlier, only about half the previous year's 23% increase. The end of U.S. federal EV tax credits last year, persistent EV battery problems, and falling used EV prices driven by rapid technological advances have all combined to weigh on the market.
China, which leads the EV market alongside the United States, has recently reduced EV subsidies, and the European Union (EU) is pushing to ease regulations on internal combustion engine vehicles, so expectations that the EV market will expand as before are limited.
Moreover, as competition in the EV market intensifies, Tesla's competitiveness is gradually weakening. More than 100 EV models are now sold in the United States as a wide range of automakers rush to launch new cars. By contrast, Tesla has not introduced a new model since unveiling the Cybertruck in 2023. As a result, Tesla's U.S. market share fell below 50% for the first time in 2024 and continues to decline.
Stephanie Valdez Streaty, director of industry insights at Cox Automotive, said, "One of the main reasons for the sales decline is the lack of new products," adding, "Automakers that do not launch new cars inevitably lose market share. Tesla needs a new model."
Industry observers say Tesla, once the EV frontrunner, no longer holds the same stature. After leading the EV market by releasing its first Roadster in 2008 and the Model S in 2012, Tesla is now seen as falling behind rivals. An S&P Global survey showing that more than two-thirds of customers who leave Tesla switch to another EV underscores this reality.
Tom Libby, an analyst at S&P Global Mobility and author of the "Tesla brand loyalty" report, said, "In the past, Tesla was more than just a car brand," adding, "It was perceived as an industry leader, and the vehicles themselves were regarded as cutting-edge EVs. But today, it's hard to say they are necessarily at the forefront of technology."
Tesla's weak after-sales service (AS) is also driving customers away. Orestis Tsonopoulos, worn out by Tesla's customer service last summer, got rid of a 2018 Tesla Model 3 and a 2020 Model Y and switched to Hyundai Motor's Ioniq 9. Bloomberg News said, "Many owners say inadequate customer support is one reason they left Tesla," adding, "There is no shortage of Reddit and Threads posts pointing this out."