Tesla's Slump Accelerates as Musk's Focus Drifts Away from Vehicle Sales

Elon Musk’s pivot toward robotics and his multibillion-dollar compensation package has coincided with a troubling deterioration in Tesla’s core automotive business. Across all three major markets—Europe, China, and the U.S.—the EV maker is losing ground to increasingly formidable competitors. The divergence between Musk’s strategic priorities and Tesla’s sales trajectory raises hard questions about where the company’s future lies.

Europe: A Market in Free Fall

Tesla’s European collapse has been particularly severe. October saw the company’s regional sales sink 48.5% year-over-year, with full-year figures tracking approximately 30% below 2023 levels. This decline stands in sharp contrast to the broader EV market, which expanded 26% across Europe during the same period.

The competitive landscape has fundamentally shifted. More than a dozen electric models now price below $30,000, while Chinese manufacturers—particularly BYD—have flooded the market with diverse EV and hybrid offerings. BYD’s October Europe sales reached 17,470 units, more than double Tesla’s volume. Volkswagen, once viewed as an EV laggard, surged 78.2% through September with 522,600 units delivered—nearly three times Tesla’s output.

The scale of model fragmentation works against Tesla’s limited lineup. While competitors now offer 150+ electric options in the U.K. alone, with another 50 new models anticipated in 2025, Tesla fields only two mass-market vehicles in the region. Even Tesla’s recent launch of a stripped-down, lower-priced Model Y appears insufficient against this onslaught.

Beyond market dynamics, some analysts link the decline to reputational damage. Musk’s endorsement of far-right political figures last year sparked regional backlash, though this appears secondary to Tesla’s aging product line and competitive disadvantages.

China and the U.S.: Mounting Pressures

China presents a more nuanced but equally concerning picture. October deliveries fell 35.8% to three-year lows, with year-to-date sales down 8.4%. Tesla now competes against entrenched Chinese brands like Chery alongside disruptors such as Xiaomi, whose YU7 model has rapidly established itself as a Model Y alternative.

In the United States, September’s 18% sales jump—driven by customers rushing to capture an expiring federal EV tax credit—proved unsustainable. October sales collapsed 24%, signaling that temporary incentives masked underlying demand weakness. While cost-cutting measures like cheaper Model Y and Model 3 variants may stabilize near-term market share, industry observers question whether discounting alone can reverse momentum.

The Strategy Paradox

Globally, Tesla’s 2024 vehicle deliveries are projected to decline 7%, extending a slowdown that began in 2023. The company’s 2023 dominance—when the Model Y ranked as the world’s best-selling vehicle—now feels distant as product cycles stagnate.

Remarkably, Musk’s newly secured compensation package insulates him from sales performance pressure. His $1 trillion award structure allows him to earn billions if Tesla sustains just 1.2 million annual vehicle deliveries over the next decade—roughly 500,000 units below 2024’s output. This structural misalignment suggests little urgency to address automotive challenges, with Musk’s energy directed toward autonomous robotaxis and humanoid robots instead.

The verdict from industry analysts is sobering: Tesla lacks both the product innovation and strategic focus to recapture lost ground against a rejuvenated global EV ecosystem.