Thanks to its mercurial leader, it is often hard to pinpoint exactly what Tesla’s next move will be.
Tesla (TSLA) CEO Elon Musk loves to zig when others zag, and his instincts have led Tesla to become the trillion-dollar entity it is today.
For example, it has spent $15 billion over the past two years on AI and its Robotaxis, while rivals such as General Motors slim down their own robotaxi ambitions.
But a new revelation from the manager of its Gigafactory outside of Berlin, Germany, defies all logic, even for a company used to playing by its own rules.
Tesla sees falling revenue, demand in Europe
Tesla has experienced diminishing demand for nearly two years, leading to its global market share declining and a sales slump it hasn’t seen in a decade.
Earlier this year, Tesla reported its second straight quarter of falling revenue with a 12% year-over-year decline to $22.5 billion.
Shrinking sales in Europe drove some of that trend.
While sales have dwindled across the brand’s markets, including North America and China, Europe has seen the most prolonged steady drop.
Tesla EU August struggles (registrations):
- France: -47.7%
- Sweden: -84%
- Denmark: -42%
- Netherlands: -50%
- Italy: -4.4%
Tesla sales in Europe were down nearly 40% from January to April compared to the previous year. In June, sales dropped another 39%. According to the European Automobile Manufacturers Association, Tesla’s first-half sales were down 44% in Europe.
Tesla plans to expand German production, despite falling European sales
This week, Andre Thierig, manager of the Tesla gigafactory located in Gruenheide outside of Berlin, Germany, told reporters that the company plans to raise production due to strong sales.
“We currently have very good sales figures and have therefore revised our production plans for the third and fourth quarters upwards,” Thierig told Germany’s DPA news agency, according to Reuters.
Related: Elon Musk has a simple solution for Tesla’s problems in Europe
German sales were down nearly 60% year over year to 1,110, according to the KBA road transport agency. But Thierig said the other markets to which his Gigafactory ships will need the increased production.
“We supply well over 30 markets and definitely see a positive trend there,” Thierig said.
Tesla Germany ships all across the European continent, and abroad
While Tesla Germany says it ships to 30 different countries, most of those countries are in Europe, where Tesla sales have been cratering.
However, the facility also ships to places outside of the continent.
Tesla began producing right-hand-drive cars at the German plant in 2024, in anticipation of bringing them to the Indian market this year.
India is currently the third-largest automobile market, behind China and the U.S., according to S&P Global, and the government says it wants to boost EVs from the current 5% to 30% of the country’s automobile sector by 2030.
Related: Tesla loses even more precious ground in this key region
But Tesla’s maiden voyage into the country hasn’t connected to that increased demand.
Tesla has received orders for just over 600 cars since it entered the market in mid-July, according to Bloomberg, citing “people familiar with the matter.”
Tesla now plans to ship between 350 and 500 cars to India this year, with the first batch set to land from Shanghai in September.
Deliveries are limited to Mumbai, Delhi, Pune, and Gurugram, but the company cannot fulfil its 2,500-car annual quota this year.
Elon Musk has a plan to turn around Tesla’s sales decline in Europe
Analysts have pointed to Tesla’s aging vehicle lineup (though Tesla has promised updates for the popular Model Y later this year) and CEO Elon Musk‘s sudden foray into right-wing politics as reasons for the company’s sluggish sales over the past few quarters.
Months ago, Musk acknowledged that his political activities had contributed to his company’s decline.
After sales in Germany reportedly fell 62% and numbers in Norway, the UK, and France weren’t much better, Musk said that any politically left-leaning buyers who abandoned the company had been replaced by people who aligned better with his politics.
During his second-quarter earnings call, he detailed how Tesla would win back customers.
“It’s worth noting that we do not actually yet have approval for supervised FSD in Europe. So our sales in Europe, we think, will improve significantly once we are able to give customers the same experience that they have in the U.S.,” Musk said.
“[FSD] really is the single biggest demand driver.”
But that doesn’t explain why the company reported six months of falling market share. January YouGov polls showing 71% unfavorability ratings in Germany and the UK may explain the decline a bit more.
