Where Does Tesla Face the Most Sales Risk: China, USA, or Europe?

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For more than a decade, the #1 EV story was Tesla’s growth story. It was extremely hard to believe that Tesla sales growth would stop anytime soon. And maybe it won’t in the bigger picture of this decade. However, there were signs a year and a half ago that Tesla was running into consumer demand issues — that’s when I started seeing warning signs. Those signs have only increased. And, of course, those signs have also expanded into actual sales drops. Many fans — or even neutral observers — didn’t see the warnings, and couldn’t believe Tesla sales growth could stop or stall. But that’s all the past, what of the future?

Many still can’t accept the idea that Tesla sales could continue dropping, even as several signs indicate they are and they will. Most recently, Elon Musk had to recruit Donald Trump, Sean Hannity, and others to try to boost Tesla sales on the right — seemingly a sign of desperation in the face of growing sales struggles. Trying to be as objective as possible, it looks to me like Tesla is facing significant sales risk in its three biggest markets — China, the USA, and Europe. The question I have today is where Tesla is facing the most risk. Here’s a poll on that question, followed by some discussion of each market and Tesla’s role and issues in those markets:

China

The main issue in China seems to be growing electric vehicle competition that gets better faster than Tesla’s vehicles. New models are constantly being rolled out with the latest tech. A handful of brands have superb technology teams and excellent software, AI, and in-house driver-assist systems. And then there’s BYD, which seems to be in a league of its own and dominates the Chinese market. All in all, Tesla’s rather infrequent updates and lack of new models could be slowly burying the brand in China. Whereas it was the hot new thing with the coolest tech a few years ago, it’s increasingly looking like an old, slow-to-adapt legacy auto company. Will the new Model Y do enough to raise the company’s sales again, or could China be the market where Tesla faces the biggest sales drop in 2025?

There’s also the political angle. While it’s not taboo at the moment to buy cars from Elon Musk, there’s obvious risk that Musk could say or do something politically that irritates Xi Jinping and puts Musk and Tesla on a blacklist — especially now that Musk is engaged in politics most of the time (and working at Tesla, SpaceX, Neuralink, The Boring Company, and elsewhere only part time).

USA

Politics is probably already a major factor in the US market. The question is how major. We’ve had numerous readers here say they’ve bought multiple Teslas and been Tesla shareholders for a long time but will never buy another Tesla as long as Musk is CEO, and I’ve heard the same from a handful of people in real life. Surveys have show similar turning away from Tesla among Democrats. However, as always, there’s the question of how many people actually go that far. How many people who would have bought a Tesla now won’t? Musk started heavily supporting Trump a long time ago, and while we’ve seen sales drop, we haven’t seen them fall off a cliff. Are recent actions notably stronger and going to lead to that kind of demand hit? Also, in the US especially, there’s the potential for the opposite effect — Trump/MAGA supports who hadn’t considered buying a Tesla before doing so now. So, there’s a net loss/net gain question that is very hard to estimate.

Also, on the matter of market competition, there’s growing competition from good electric cars in the US market as well, even if it’s not nearly as serious as in China or Europe.

Europe

Europe may not have as extreme a political reaction to Musk and Tesla as the US … or maybe it will. Europeans are typically very aware of US politics, and on top of that, Musk has quite abnormally and radically inserted himself into some major European political debates. He has promoted far-right parties that are not very popular in a few major countries. He has waded in on Nazis and the Holocaust in a way that does not jibe well at all with most Europeans. Also, Trump is much less popular in Europe than he even is in the US, and everyone knows now that Musk and Trump are best buddies (politically). Additionally, while Musk hasn’t dismantled a bunch of important federal government agencies in Europe, he has supported attacks on NATO, the EU, Zelensky, and important European policies and alliances. Lastly, while there may be a large number of MAGA supporters in the US who will all of a sudden consider buying a Tesla, there isn’t a large anti-EV, pro-Trump population in Europe that could suddenly change sides.

Then we get to the matter of market competition again. While the EV competition in Europe may not be as huge or fast to innovate as the EV competition in China, it’s still a quickly evolving and highly competitive EV environment — well beyond the US market. Again, it seems that Tesla is not introducing and upgrading models nearly as fast as the EV competition in Europe. The new Model Y will provide some enthusiasm and respite, but dozens of other new and upgraded EV models from other auto brands are hitting Europe this year as well.

So, Where Does Tesla Face the Most Risk?

Taking all of these matters into account, honestly, I’m having a very hard time trying to figure out where I think Tesla is facing the most risk. I don’t even know how I’m going to vote yet. But, to end, let’s review Tesla’s presence in these markets in 2024:

Go vote now if you haven’t yet voted on which market you think Tesla is facing the most risk in.