Shares of the electric vehicle (EV) company Tesla (TSLA -3.75%) traded nearly 5% lower as of 11 a.m. ET Wednesday. New data today shows that Tesla's EV sales continue to struggle abroad, as consumers opt for EVs sold by competitors.
Sales in Europe plunge
Data in recent months has indicated that Tesla's second-quarter EV deliveries could come in weak, after only delivering roughly 337,000 deliveries in the first quarter of the year, the lowest level seen in over two years.
Image source: Getty Images.
Earlier today, media outlets reported that Tesla sales in the European Union, Britain, and the European Free Trade Association declined by nearly 28% to 13,863 units in May, according to data provided by the European Automobile Manufacturers Association (ACEA). Tesla's European market share also fell by 0.6% year over year to 1.2% in May.
Meanwhile, Chinese EV competitors continued to make strong gains in the region.
"Despite the EU's imposition of tariffs on Chinese electric vehicles, its car brands continue to post strong growth across Europe," JATO Dynamics Global Analyst Felipe Munoz said in a statement.
Tesla is expected to announce second-quarter deliveries in early July. While estimates continue to change, Wall Street analysts are currently projecting Tesla to deliver 393,000 vehicles, representing an 11% year-over-year decline.
Not a surprise, but the narrative may be changing
Tesla's struggling EV business is nothing new at this point, but I do think the narrative behind the struggles could be important. Earlier this year, many believed Tesla CEO Elon Musk's involvement with the Department of Government Efficiency (DOGE) had damaged Tesla's brand.
With Musk stepping away from DOGE, I think the narrative about him damaging the brand will ultimately fade. However, if the new narrative is that Tesla's competitors are simply putting out a better product, which appears to be the case when looking at competitors like BYD, that could be viewed more negatively by the market.
Tesla investors have always looked past the company's EV struggles to future initiatives like robotaxis and Optimus humanoid robots. But with the stock trading at a monster valuation, I think it will be difficult for investors to ignore what's happening with the company's core EV business forever.
