Is the Musk effect to blame for Tesla sales slump in five European markets?

Tesla posted lower sales across five European countries in January, including the UK and France, as competitors with newer models gained on the electric vehicle maker and polls show public opinion souring on CEO Elon Musk.

Musk has made a high-profile foray into politics, with much of his 2024 dominated by his financial support of US President Donald Trump, on whom the billionaire CEO spent $250m (R4.67bn) in a successful campaign to return to the White House. He has also stirred controversy with his vocal support for far-right parties in Britain and Germany on his social media platform X.

Tesla's UK sales fell nearly 12% in January as monthly EV registrations in Europe's biggest battery-electric market surged to a record, according to data published by New AutoMotive on Tuesday. That comes after a 63% decline in January sales for Tesla in France, drops of 44% and 38% in Sweden and Norway, and a 42% fall in the Netherlands.

In California, the largest US car market with more than 1.7-million vehicle registrations in 2024, Tesla sales fell by 12%. This year Tesla posted its first-ever annual decline in deliveries, though it continues to be the leading EV seller in the US.

Musk said he would launch long-awaited cheaper EVs in 2025, and the company has increased its focus on autonomous driving technologies.

Tesla did not immediately respond to a request for comment on its sales.

The company fell from the No 2 spot for EV sales in Britain in January 2024 to No 7 behind Volkswagen, Mercedes and Stellantis' Peugeot, which all posted higher sales.

Several polls show consumers have mixed views of Musk. A late January survey conducted by EV review website Electrifying.com showed 59% of British owners of EVs, and those intending to buy such a vehicle, said Musk's influence would deter them from buying a Tesla.

"Musk's influence on the brand is becoming increasingly polarising, pushing many buyers to look elsewhere," said Electrifying.com CEO Ginny Buckley.

"With more than 130 mainstream EV models available in the UK, compared tot 25 in 2020, competition has never been fiercer and Tesla is feeling the pressure."

European politicians have pushed back lately against Musk's recent comments, which include the amplification of far-right commentators on X. Some accounts have quit the platform, citing the spread of misinformation.

Musk has dismissed criticism against him as an affront to democracy and free speech. The Tesla CEO has become a vocal supporter of the far-right Alternative for Germany (AfD) ahead of February elections. He recently told an AfD audience before the 80th anniversary of the liberation of the Auschwitz concentration camp that Germans should not feel guilt for the sins of their great-grandparents.

The share of Swedes with a positive view of Tesla fell to 11% in a Novus survey conducted after Trump's inauguration, down from 19% in a similar poll conducted from  January 15 to17, according to Swedish news agency TT. Those with a negative view jumped to 63% from 47%, TT reported.

The CEO of research group New AutoMotive, Ben Nelmes, told Reuters Tesla's problems stem less from Musk's actions and more from its failure to launch a new mainstream model since the Model Y in 2020, while rivals, including Chinese EV makers, have fresher products on the market.

"It's not due to Musk's views or British motorists' views about Musk. They stopped innovating after the Model Y," he said of Tesla.

Despite the factors, the company's stock has continued to outperform the market, with shares more than doubling over the past year. The stock trades with a forward price-to-earnings ratio exceeding 131, ahead of not only legacy carmakers but also high-flying tech stocks with P/E ratios in the 20s, according to LSEG data.