Tesla Hampered by 'Musk Risk'... European Sales and Market Share Plummet

Global electric vehicle maker Tesla has reported an 'earnings shock' for the second quarter, with results falling short of market expectations. Analysts say that negative perceptions of CEO Elon Musk, who has become a close ally of U.S. President Donald Trump in the European market, have had an adverse effect on sales.

On the 23rd (local time), Tesla announced that its revenue for Q2 (April–June) was $22.496 billion. This figure represents a 12% decline compared to the same period last year. It also missed the average market forecast on Wall Street—$22.74 billion, as tallied by financial data provider LSEG. Tesla has now missed market forecasts for two consecutive quarters. During the same period, earnings per share (EPS) and operating profit also plunged, dropping 23% and 42% respectively to $0.40 and $923 million.

Wall Street has called Tesla’s Q2 performance the biggest sales drop in its 10-year history. The main driver was a roughly 16% decline in automotive division sales compared to a year earlier. Analysts have noted that, in the European market—which is generally anti-Trump—Elon Musk’s acceptance of a senior post in the Trump administration’s Department of Government Efficiency (DOGE) fueled consumer backlash, further compounded by his support for the far-right German party AfD (Alternative for Germany).

According to new car registration data released by the European Automobile Manufacturers Association (ACEA), Tesla registered 13,863 new vehicles across Europe in May—a 27.9% drop from 19,227 a year ago. Tesla’s European market share also fell from 1.8% to 1.2% in the same period.

Although Musk returned to day-to-day management in May, there has been no clear breakthrough yet. On this day, Tesla's stock closed up 0.14% during regular trading, but fell more than 4% in after-hours trading to $317.87 following the earnings call.

Wall Street is adjusting its expectations. The average target price from analysts is $305.05 per share, with projections that the price could fall further within the next 12 months. Of the analysts surveyed, 17 recommended buying, while 17 rated it “sell” and 10 remained neutral. UBS, Switzerland’s largest investment bank, recently commented that “Tesla’s fundamentals are overvalued,” setting a target price of $215—about 32% below the current level.

Reporter: Eunhyuk Ryu ehryu@hankyung.com