Several reports are coming out about Tesla’s sales going down in Europe, but the reports are misleadingly framing the situation simply as the competition taking over.
It’s not that simple.
Tesla sales in Europe
This week, Automotive News is out with a report claiming “Tesla sales plunge in Europe even as EV market booms“:
Sales of battery-powered cars in Europe rose 34% to 217,495 in the first half, according to data from JATO Dynamics market researchers. Tesla’s European sales were down 18% to 37,251 during the period.
The reports then breaks down several European markets where Tesla’s sales are crashing, while the competition is taking over from the California-based automaker who used to be the market leader for EVs in those markets.
Zero Hedge, a publication unapologetically anti-Tesla, was out with a similar report this week regarding Germany: “Tesla Crushed in Germany by EVs From VW, Renault, & Hyundai Group“:
It has been a very ugly year in Germany for auto sales, except for EVs. The overall new vehicle market in Germany has plunged by 30% in the first seven months of 2019 to 1.526 million units. But EV sales have skyrocketed by 65% over the first seven months, after having already skyrocketed by 88% in the same period in 2019, according to KBA, the German agency that handles nationwide new-vehicle registrations. Year-to-date, 61,105 EVs were sold, giving EVs a share of 4% of total new vehicle sales, up from less than 1% in 2018.
But Tesla got crushed. Its sales over the seven-month period fell from 6,816 in 2019 through July to 5,306 over the same period this year, and its share in the EV market plunged from 18.4% to 8.7%.
The report suggests that the competition is finally taking over Tesla in Europe.
What analysts and the media get wrong about Tesla’s sales
The data is most likely accurate. That’s not the issue.
However, the explanation is not as simple as the competition getting the better of Tesla with new electric models hitting the market.
Tesla’s global deliveries have surprised last quarter amid the pandemic by being down only 5%, while the rest of the industry saw a 30%+ drop in deliveries.
The automaker didn’t do as well in Europe, but that’s because it barely had any supply for the market in Q2.
All of Tesla’s European vehicles come from its Fremont factory, which was shut down for over a month during the second quarter due to the pandemic, and the shutdown disproportionately affected the European supply of Tesla vehicles.
At Fremont factory, Tesla produces vehicles in batches for different markets, and those batches can last several weeks, The shutdown happened as Tesla was supposed to produce its batch of vehicles for the European markets.
This resulted in a very short supply of Tesla vehicles available for sale in Europe and only now in late July, and this month Tesla has started producing European vehicles again following the reopening of the factory in May.
Let me be clear, I am not blind to Tesla’s competition, especially in Europe.
There’s no doubt in my mind that’s Tesla EV market share is going to slide in Europe this year and over the next few years as several other automakers bring new EVs to market on the continent to comply with local regulations.
However, it’s also clear to me that the drop we are seeing during the first half of the year is way disproportionate due to Tesla’s production cycle for the European market being affected by the factory shutdown.
That’s something that most of those reports are missing.
I believe we are going to see Tesla recover in September with strong sales in Europe once the next batch of vehicles makes it to the continent.
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