Tesla’s sales in Europe took a major hit in January, diverging from the overall trend in the electric car market. While European electric car sales grew by over 30% during the month, Tesla’s sales across the EU, EFTA, and the UK dropped more than 45%, with the EU seeing a decline of over 50%.

This marks the latest setback for Tesla, following its first sales drop in over a decade last year, as demand slowed and competitors gained ground.

Investment director at AJ Bell, Russ Mould, believes the main reason for Tesla’s January slump is growing competition, especially from Chinese automaker BYD. BYD’s vehicles include features that other carmakers charge extra for, making them more attractive to buyers.

Mould also suggests that some customers may be distancing themselves from Tesla due to Elon Musk’s political involvement. Musk’s actions, such as supporting far-right figures and criticizing political leaders, have sparked controversy, especially in markets like the UK and Germany.

Asked whether Musk’s political stance is contributing to Tesla’s sales drop, Peter Bardenfleth-Hansen, a former senior director at Tesla, agreed that Musk’s actions were a factor. “His political views and public behavior have likely hurt his image, especially among the customers who traditionally buy Teslas,” Bardenfleth-Hansen said.

While Musk’s ties with former US President Donald Trump initially gave Tesla’s stock a boost, the ongoing political climate and Trump’s lack of support for electric vehicles may be causing further challenges for the company.

In addition to political issues, general market concerns, such as interest rate uncertainty and the potential impact of Trump’s tariff plans, may also be contributing to the US electric carmaker’s struggles.

With competition rising and challenges mounting, Tesla will need to navigate these hurdles to regain its momentum in the global market.