Tesla's vehicle sales in Australia experience a decline following a two-month rise.
Tesla Experiences Sales Drop Amidst Intensifying Competition
In a surprising turn of events, Tesla reported a significant drop in sales for July 2024, with only 2,592 units sold. This decline, particularly in the sales of the Model Y, has raised concerns about a possible demand gap for the new model.
The Model Y sales dropped steeply from 3,457 in June 2022 and 1,353 in July 2021, to just 555 in July 2022. This downward trend seems to be a result of intensifying competition and a shrinking market share in key regions such as Europe and California.
In Europe, Tesla's sales registrations fell by 41.6% in July compared to the previous year, mirroring a broader sales decline of 34.3% year-to-date (Jan-July 2025) across the continent. The UK alone saw a 60% drop in Tesla sales in July. The European EV market has become highly competitive, with Chinese automakers like BYD gaining market share while Tesla struggles to keep pace. Local manufacturers are also pushing aggressively, eroding Tesla's foothold.
In the U.S., Tesla registrations in California dropped 18.3% year-to-date in 2025, while competitors such as Honda, Toyota, Ford, and Chevrolet posted significant gains. The Model 3 and Model Y remain popular, but Tesla's dominance is clearly waning in this crucial market.
Tesla's aging vehicle lineup may also be contributing to the sales drop. The company has pushed back volume production of its affordable models into the second half of this year, after previously revealing that it was likely to be in the first half of 2025.
Elon Musk's controversial public image may also be alienating some consumers, potentially weighing on demand in sensitive markets like Europe.
Amidst these challenges, Tesla is working on a more affordable model, which is expected to be sold in the Chinese and the US markets initially. The company is also offering incentives to boost sales, such as an additional $2,000 off the price of a new or demo Model Y when trading in a used vehicle, and a $3,000 lending incentive and a $3,000 novated lease incentive for those buying a new Model Y.
Meanwhile, Polestar, a rival EV manufacturer, is also experiencing a drop in sales. The Polestar 3 had its second-lowest month for the year with only 3 sales measured across July. Sales of both Tesla and Polestar models are starting to taper off due to increased competition in the market, particularly on the more affordable end.
In a positive note, Tesla is allowing existing owners of Tesla EVs with enhanced autopilot or full-self-driving (FSD) software to transfer it to a new or demo Tesla until the end of September.
Riz Akhtar, a mechanical engineer and the founder of carloop based in Melbourne, specialising in Australian EV data, insight reports, and trends, drives a red Tesla Model 3. He expressed his passion for cars, particularly EVs, and his goal to help reduce transport emissions in Australia.
It's unclear if Tesla's more affordable model is likely to see a local launch before the end of the year. However, with the intensifying competition in the EV market, it's clear that Tesla will need to adapt and innovate to maintain its position as a leader in the industry.
[1] https://www.reuters.com/business/autos-transportation/tesla-sales-fall-sharply-europe-amid-broader-slump-2022-08-04/ [2] https://www.autocar.co.uk/car-news/new-cars/tesla-loses-market-share-europe-amid-broader-slump [3] https://www.ft.com/content/772c1a2c-935a-41e4-a97c-0b8d9f69e6e5 [4] https://www.autonews.com/vehicles/tesla-sales-drop-california-amid-competitive-market-growth-rivals
- The European EV market, once dominated by Tesla, is increasingly becoming competitive, with Chinese automakers like BYD and local manufacturers gaining market share, forcing Tesla to innovate and adapt to maintain its position in the technology and finance sectors.
- In response to intensifying competition and a drop in sales, Tesla is offering incentives such as discounts and lending incentives for the Model Y, and is planning to launch a more affordable model in the technology and finance sectors, with a focus on the Chinese and US markets.
