Tesla's Biggest Problem Just Got Worse

Tesla has grand ambitions to become an AI giant. But that relies on its core automotive business, which appears to be in serious trouble.

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Rob Stumpf

By: Rob Stumpf

Mar 3, 2025 at 2:38pm ET

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Tesla's European deliveries continue to circle the drain.
This includes Norway, which is down 48% year-over-year.
Despite this, some analysts feel that Tesla's stock is under-valued, though it trades at a price-to-earnings ratio that's already 900% higher than Toyota.

Tesla is having a rough time in the European sales department. Across the continent, the story is the same: fewer Tesla sales, more competition and a CEO who keeps making headlines for all of the wrong reasons. The numbers don't lie—while Europe's overall EV sales are up, deliveries for Tesla are down hard, continuing the trend from a rather brutal January, and things don't look like they're letting up anytime soon.

Countries like Norway (which was once Tesla's Scandinavian stronghold) have seemingly lost the love for the American automaker. Sales there are down 48% year-over-year. That's roughly the same as the European-wide drop of 45.2% in January. Denmark and Sweden also saw year-over-year drops of more than 40% for February, while France saw a lesser 25% drop year-over-year according to data first reported by Electrek.

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Despite European deliveries falling, Tesla's stock is still out-performing other automakers. Granted, share prices have fallen more than 38% since peaking in December 2024, but the real number to look at—Tesla's price-to-earnings ratio, which shows how much it's worth to how much it earns in profits—is still at a mind-boggling 86. Toyota, the next-highest car manufacturer, sits at a cool 9.01.

So what's happening here? How can Tesla be losing customers at an alarming rate while still be treated like the golden child of wall street?

The answer is a complicated paradox of duality, and its name is Elon Musk.

Tesla's stock has long rested on the shoulders of Musk. The company's CEO is a visionary—one who sold the world on Tesla's mission of sustainability while also expanding the automaker's product line beyond just cars. This has allowed investors to ignore Musk's political side and instead embrace the promises of autonomy, humanoid robots and robotaxi ride-hailing services. In fact, some analysts believe Tesla's share price still has a valuation well over $500 per share.

Meanwhile, the rest of the world is invested in Musk's political meddling like it's a reality TV show. Protestors have demonstrated at Tesla showrooms across the globe to dissuade would-be buyers from purchasing a Tesla while others are doing the same with their wallet—simply buying anything other than a Tesla when shopping for an EV. That includes owners who have otherwise been loyal to the brand in years prior.

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It's still early in the year, but if public events and outcry are any indication of what 2025 has in store for Tesla, Europe turning its nose at the automaker could be just the beginning of a substantial sales slump. Competition in the EV space is fiercer than ever. With more and more car companies focusing on affordable, quality models, Tesla could be in for a very nasty wake-up call.

Eventually, Wall Street may have to start questioning why Tesla is still priced like a startup instead of, you know, an actual car company. If it can't fix the core business, its stock bubble may eventually burst and those results won't be pretty.

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