From decline to desert: Tesla sales fall in Europe, bets on Saudi launch to regain global traction

Tesla’s grip on Europe’s EV market continues to weaken as February sales plunged nearly 43% compared to the same month last year. The electric carmaker sold fewer than 17,000 vehicles across the EU, UK, and EFTA states (down from over 28,000 in February 2024), according to data from the European Automobile Manufacturers Association (ACEA).

The decline comes despite a continent-wide boom in electric vehicle (EV) sales. Battery-electric vehicle (BEV) registrations in Europe rose 26.1% in February, while Tesla’s BEV market share was halved from 21.6% to 10.3%. Its overall market share also slid from 2.8% to 1.8%, a troubling drop for the American automaker.

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As European buyers embrace cheaper and newer EV options, Tesla faces stiff competition from legacy automakers and emerging Chinese brands. Its limited, ageing product line has also failed to match the pace of innovation flooding Europe’s EV market. Industry observers expect a modest rebound with the upcoming launch of the revamped Model Y, but concerns remain.

“Tesla’s current lineup lacks the freshness and pricing appeal that buyers are now demanding,” said Felipe Munoz, global analyst at JATO Dynamics. “The next few months will be critical.”

Political turbulence may have also hurt demand. Tesla CEO Elon Musk has drawn controversy in Europe over his alignment with far-right ideologies and provocative statements, which have prompted backlash from some customers and governments.

Amid shrinking European influence, Tesla is turning east. The company announced it will begin selling in Saudi Arabia from April, a major market it previously avoided due to tensions between Musk and the kingdom’s sovereign wealth fund.

The rift dates back to 2018 when Musk tweeted he had “funding secured” from the Public Investment Fund (PIF) to take Tesla private; a claim that triggered legal trouble and damaged relations. Following years of cold diplomacy, the two sides have recently reconciled.

Tesla’s Saudi launch event, scheduled for April 10 in Riyadh, will feature the brand’s EV lineup, solar-powered products, and even the humanoid robot “Optimus.” The brand’s pivot to the Gulf region is also timely, as Saudi Arabia aims to electrify its roads under Vision 2030, despite EVs currently making up just 1% of new car sales in the country.

While fuel remains cheap and EV infrastructure sparse in Saudi Arabia, the kingdom’s $925 billion PIF is heavily investing in the sector, including Tesla rival Lucid and a new domestic brand, Ceer.