Electric dreams, political nightmares: Tesla is losing the market because of Elon Musk

RU

Falling in a growing market

Tesla’s troubles are an outlier: the global EV market has continued to show steady growth, even as its most recognizable brand continues to gain pariah status. In 2024, 17 million electric vehicles were sold worldwide, meaning one in every five cars purchased around the globe was electric. By 2035, EVs are projected to make up 70% of global car sales. Today, there are around 600 EV models on the market, and by 2028, that number is expected to reach 1,000.

Growth is being driven by government support for green transport and restrictions on internal combustion vehicles in major cities. In Norway, 95% of cars sold in 2024 were electric or hybrid; in Sweden, 60%; in the Netherlands, 30%; in France and the UK, 25%; and for the first time, EVs accounted for over 20% of car sales in the U.S.

The biggest EV buyer in terms of volume — not domestic market share — is China, accounting for 60% of global sales, followed by Europe (25%) and the U.S. (10%).

As expected, competition among EV producers is intensifying. Chinese companies like BYD, Nio, and XPeng are actively expanding overseas. European automakers — BMW, Mercedes-Benz, Volkswagen, Renault, and Stellantis — are ramping up investments and releasing new EV models.

Tesla, once highly popular in Europe and a beneficiary of state support, is now losing favor. Since Elon Musk aligned himself with Donald Trump and began publicly supporting far-right politicians on the continent, both consumers and investors have begun to “vote with their wallets.” In 2024, Tesla's European sales dropped by 10.4%, to 328,000 units. After Trump’s presidential victory and Musk’s increased political activity, the decline accelerated: in Q1 2024, sales were down 8%, but by January 2025, the drop had reached 45%.

After years of global dominance, Tesla in 2024 ceded its leadership position to its main rival, China’s BYD. Tesla produced 1,773,443 electric vehicles, while the Chinese automaker made 1,777,965. Tesla’s sales also declined: Musk’s company sold 1,789,226 vehicles, down from 1,808,581 in 2023. Its stock price has taken a hit, with Tesla’s market cap falling from $1.4 trillion at the end of 2024 to $895 billion at the time of this article’s publication. Tesla’s market share in Europe — where it had dominated for the past decade — is shrinking.

In the U.S., Tesla still leads with a 49% market share (634,000 vehicles sold), but sales are falling, and competitors like General Motors, Ford, Hyundai, and Kia are rapidly expanding their electric lineups and targeting mainstream consumers. Tesla’s own lineup remains limited to five models: Model S, Model X, Model 3, Model Y, and Cybertruck.

In China, Tesla hit a record 657,000 EVs sold in 2024 (up 8.8% year-over-year), but exports from its largest factory in Shanghai dropped 24%, and in February 2025, they collapsed — falling 87%. This decline is largely due to a European Commission investigation into large-scale subsidies for Chinese-made EVs and their dumping on European markets. Protective measures were introduced following the probe — these included a 7.8% tariff on imported Tesla vehicles made in China.

There are two main reasons why competitors are outshining Tesla:

• Price: Chinese automakers offer more affordable models, which are in high demand among mainstream consumers.
  
  
• Technology and innovation: Tesla's competitors — especially Chinese brands — are quicker to adopt new technologies and are more aggressive in developing software, AI, advanced driver-assistance systems, and autonomous driving.
  

Lost customers are hard to replace

Tesla was long associated with innovation, sustainability, and progressive values. But Elon Musk’s political involvement and controversial public statements have seriously damaged the brand’s reputation. Musk was not only one of the biggest donors to Trump’s campaign — after the election, he also became one of the president’s closest allies, taking the helm of the newly created Department of Government Efficiency (DOGE).

Still, Tesla’s biggest troubles are in Germany, where Musk’s vocal support for far-right forces ahead of the February Bundestag elections — coupled with a Nazi salute during Trump’s inauguration — caused a dramatic drop in sales. In February 2025, they fell 76% (to just 1,429 cars), even as Germany’s overall EV market grew by 31%.

Recent polls show that 94% of Germans are no longer considering buying a Tesla, despite the company running a plant near Berlin that employs around 12,000 locals. Moreover, Musk’s endorsement of the far-right party Alternative for Germany (AfD) has led many current Tesla owners to look for alternatives simply because they do not wish to be associated with Musk and Trump.

Polls in the Netherlands also show that 31% of Tesla owners plan to sell or have already sold their cars. Tesla sales in February dropped in France — by 26% (to 2,395 cars), in Norway — by 45% (to 917), in Sweden — by 42% (to 613), and in Denmark — by 48% (to 509).

The “global” protest against Musk and Tesla is gaining momentum in North America as well. U.S. consumer sentiment began shifting after Musk’s 2022 acquisition of Twitter. At that time, 22% of new car buyers indicated that they would “definitely” consider buying a Tesla, but by the end of 2024, that number had dropped to less than 8%. Over the same period, the share of those who completely rule out buying a Tesla has grown from 39% to 63%. Interestingly, the percentage of Tesla owners who support the Democratic Party has fallen from 40% during Joe Biden’s presidency to 29% today, while support among Republicans has remained steady at around 30% since 2021. Nevertheless, demand for EVs remains highest in Democratic-leaning states.

Many Americans dissatisfied with Elon Musk have begun holding regular pickets outside Tesla dealerships, urging supporters to sell both their Tesla vehicles and company shares. At times, the protests spill over into acts of vandalism: social media is flooded with photos and videos of Teslas and charging stations defaced with graffiti. Instances of Tesla vehicles being set on fire in parking lots and near dealerships are also on the rise.

Similar trends are being observed in Canada. Musk’s public comments about Prime Minister Justin Trudeau, the billionaire’s support for Trump’s efforts to turn Canada into an American state, and his attempts to influence Canadian elections have led to more than just a decline in demand for Teslas among Canadians — they have also seen the removal of the brand from Toronto’s EV taxi incentive program, and they have even sparked a campaign to strip Musk of his Canadian citizenship (the petition has already gathered close to 400,000 signatures). In addition, a major act of vandalism occurred in Hamilton, Ontario, where more than 80 Tesla vehicles were damaged in an incident that left several deep scratches and slashed tires.

Aware of the business risks tied to Musk’s political activism, members of Tesla’s board of directors recently sold over $100 million worth of company stock. Musk himself, however, is urging employees not to sell their shares despite the difficult times. Trump, in an effort to help out his political ally, is threatening jail time for anyone involved in vandalism against Tesla, and even staged what appeared to be a promo for the company right on the White House lawn.

Nevertheless, Musk will struggle to find American replacements for his shrinking customer base. Electric vehicles have never been particularly popular among far-right supporters, many of whom deny climate change and reject the green agenda.

Caught between Trump and Xi Jinping

Tesla’s troubles don’t end there. The war in Ukraine is driving up the price for raw materials and continues to disrupt supply chains. Trump’s U.S.–EU trade war threatens new tariffs, and escalating tensions between Washington and Beijing are casting doubt on Tesla’s future in China — another key market for the company. Tesla employees have even submitted complaints about Trump’s trade war to U.S. Trade Representative Jamieson Greer, warning that the company is losing its competitive edge. According to the Financial Times, no one dared to sign the letter out of fear of being fired.

Last year, President Biden imposed a 100% tariff on Chinese-made EVs entering the U.S., effectively closing the American market to Chinese brands. More recently, Donald Trump has taken this policy even further, expanding trade restrictions to a wide range of products and effectively declaring a trade war with China. China has accepted the challenge, saying: “If war is what the US wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end.”

As U.S.–China tensions rise, Tesla’s vulnerability increases on several fronts. Around 40% of Tesla’s critical materials, including the rare earth elements used in EV batteries, come from Chinese suppliers. Additionally, Tesla’s Shanghai plant accounts for more than half of the company’s global exports and a significant share of its profits. Vehicles made there are also used in government tenders. The factory's construction was heavily subsidized by the Chinese state, which provided $1.4 billion in low-interest loans along with reduced corporate tax rates.

This year, Tesla opened a second facility in China — a plant for high-capacity energy storage systems — further deepening its dependence on Chinese infrastructure and supply chains.

It’s no coincidence that Musk avoids criticizing the Chinese leadership. On the contrary, he often expresses admiration for the country’s technology, infrastructure, and work ethic — even going so far as referring to Taiwan as an “integral part” of China. Against this backdrop, Musk will find it increasingly difficult to navigate between Donald Trump and Xi Jinping while maintaining political neutrality — and Tesla will face growing challenges when competing with Chinese automakers on their home turf.

If the trade war escalates into a full-blown political confrontation — or even a military conflict, something Trump is already talking about — Tesla will likely not just face boycotts, protests, and acts of vandalism by Chinese consumers, but may be forced to fully exit the Chinese market, losing both its assets and its operations, as many Western companies in Russia did after the full-scale war in Ukraine began.

In any case, given the scale of the risks, Tesla’s position in the Chinese market remains extremely unstable. It may be time to start making strategic calculations for a reduced presence in China — what some are calling the “Great Decoupling.” This is especially relevant given Musk’s close ties to the Pentagon, his alleged access to classified U.S. military contingency plans for a potential war with China, and the billions in contracts awarded to his company SpaceX for helping counter Chinese threats.

It’s not out of the question that these very calculations are behind the Trump administration’s recent moves to gain access to rare earth metals and minerals in Ukraine — or even in Russia. After all, producing a Tesla Model S battery requires around 63 kg of high-purity lithium, and Ukraine holds a third of Europe’s lithium reserves. Musk has donated $288 million to Trump’s campaign — and he may well be hoping to see a return on that investment.