Tesla Faces Mounting Challenges in 2025: Declining European Sales, Widespread Protests, and Shifting Consumer Sentiment

Tesla, Inc. (NASDAQ:TSLA) is experiencing mounting challenges in early 2025, facing a combination of declining European sales, widespread protests, and shifting consumer sentiment tied to CEO Elon Musk's role in the Trump administration.

Tesla (NASDAQ:TSLA) is facing a combination of declining European sales, widespread protests, and shifting consumer sentiment tied to CEO Elon Musk’s role in the Trump administration.

Recent data showed Tesla’s European market performance has weakened substantially. January 2025 registration numbers revealed steep declines across key markets, with France seeing a 63% drop, Germany experiencing a 60% decrease, Norway falling 38%, and the UK showing a 12% reduction compared to the previous year.

The company’s product lineup remained heavily dependent on two models, with over 95% of sales coming from the Model 3 and Model Y. This concentration came at a time when competitors like BMW were strengthening their position in Europe, and Chinese manufacturer BYD was gaining ground despite discussions about potential tariffs.

CFRA analyst Garrett Nelson maintained a bullish stance on Tesla, pointing to the potential of autonomous driving technology. Nelson estimated the global autonomous driving market opportunity at over $5 trillion, suggesting Tesla’s current stock price represented only a fraction of its potential value.

However, this optimistic outlook contrasted with immediate challenges facing the company. Weekend protests dubbed “Tesla Takedown” and “Tesla Takeover” occurred at multiple Tesla dealerships across the United States and international locations. Protesters gathered with signs opposing Musk’s political involvement and his role as head of the Department of Government Efficiency (DOGE).

Musk’s Political Activity

Recent polling data indicated growing public concern about Musk’s political activities. A Quinnipiac poll from January showed 53% of voters opposed Musk’s prominent role in the Trump administration, while only 39% supported it. The American EV Jobs Alliance found even lower support among EV drivers, with just 35% viewing Musk positively and 42% expressing negative opinions.

Tesla’s brand perception has also shifted. Among EV competitors Ford, Toyota, and Volkswagen, Tesla recorded the lowest favorable rating at 63% and highest unfavorable rating at 37% in recent surveys of likely EV buyers.

Internal tensions have emerged as well. The Washington Post reported on a leaked recording of a Tesla staff meeting where employees expressed concerns about damage to the company’s brand. Senior managers reportedly indicated Tesla would benefit if Musk stepped down from his role.

The company faces additional market pressures as the Trump administration considers cutting federal EV tax credits. This change would remove a key sales incentive and force Tesla to compete more directly with foreign automakers on price.

Hedge fund interest remained substantial, with 99 hedge fund investors maintaining positions in Tesla stock. However, Oppenheimer analyst Colin Rusch noted that Musk’s political activities created potential risks for Tesla’s sales, particularly in California and the European Union.

JPMorgan Asset Management’s Kerry Craig suggested investors were looking beyond traditional AI technology leaders due to valuation concerns. Craig emphasized opportunities along the AI value chain, including software companies and energy providers.

Tesla’s Q4 2024 performance showed mixed results. While the company reported better-than-expected earnings in late October, portfolio managers at Aristotle Atlantic Large Cap Growth Strategy noted the stock’s performance was influenced by expectations about autonomous driving regulation and potential changes to EV tax incentives.

The company’s next delivery report, due in early April, will provide more clarity on the impact of these challenges on Tesla’s global sales performance.