Musk will personally deal with Tesla's falling sales in Europe and the US. What's in store for investors?

Tesla CEO Ilon Musk has taken charge of sales in Europe and the United States, sources told Bloomberg. Musk made this decision after the departure of a top manager who was responsible for these regions. Tesla continues to face falling sales amid Musk's political activism and a highly competitive market, with deliveries in Europe suffering the most. The electric car maker is expected to release its second-quarter deliveries data on Wednesday, and Wall Street is pessimistic.

Tesla CEO Ilon Musk will personally handle the company's plummeting sales in Europe and the U.S. following the high-profile departure of top executive Omed Afshar, who had been handling those regions, Bloomberg sources reported. Afshar was the next top executive to leave the company last month amid falling shipments in key markets. After his departure, Musk himself and his deputy and China-based senior vice president Tom Zhu shared the duties. According to Bloomberg's sources, Zhu will now oversee Tesla's global manufacturing operations and continue to lead the Asian region.

Tesla representatives did not respond to Bloomberg's requests for comment.

Sales in Europe remain weak even after Musk ended his tenure at the DOGE government efficiency department in May and pledged to focus on business. His political activities in the White House and Tesla's declining competitiveness against new Chinese players like BYD have taken a heavy toll on the brand's image in Europe. This is currently the weakest market for Musk's company, Bloomberg notes. The billionaire himself stated this in an interview at the Qatar Economic Forum, the publication recalls.

In the first quarter, Tesla's deliveries fell 13% year-over-year, to the lowest in nearly three years, Bloomberg notes. Sales in Europe fell nearly 30% in May, the fifth straight month of decline, while the entire European electric vehicle market, by contrast, grew by about the same amount, Bloomberg emphasizes. 

Wall Street analysts expecting Tesla to report its second-quarter shipments data this week are skeptical. Many of them have worsened their forecasts, pointing out that the problems that hampered the manufacturer in the first quarter haven't gone anywhere, CNBC reports. The consensus estimate is that Tesla will report it sold 387,000 vehicles - nearly 13% fewer than it sold in the same period last year, the TV station cites FactSet data.

Deutsche Bank analysts predict that Tesla's deliveries in the second quarter will be even lower than consensus (about 355 thousand cars) and that sales in Europe will still be under attack. Canaccord Genuity agrees and recognizes that the impact of Musk's political activism on the company's reputation is now evident, especially in the EU. Nevertheless, analysts of the investment company count on the release of the updated model Y and interest in the robotaxi project.

«Based on our estimates, the decline in demand for Tesla vehicles recorded in the first quarter results continues into the second quarter. We expect the year-on-year decline to accelerate from 

-13% in the first quarter to 

-19% in the second, with volumes falling from 444,000 in the second quarter of 2024 to just 360,000,» JPMorgan wrote, adding that it sees big risks to its annualized supply forecast as well. To fulfill it, the company will need a sharp turnaround, the bank's analysts said.

[Tesla's] fundamentals remain under pressure - both in terms of volumes and margins, Barclays explains. Weak electric car sales are overshadowed by a potentially huge robotaxi market, the bank points out. Nevertheless, it still sees the automotive division as the company's main source of revenue in the coming years. And its attempts in the field of autonomous transportation are assessed as either success or failure;

Teslashares of Teslacollapsed by nearly 8% in trading on July 1 amid a new round of conflict between Musk and Trump over the «great and wonderful» budget bill. That document calls for, among other things, the elimination of tax credits for the purchase of electric cars. On July 1, it passed in the Senate and Musk blasted it with renewed criticism, vowing to get the congressmen who supported it to resign. Trump, in turn, threatened to strip Musk's projects of subsidies and even mentioned deporting the billionaire, who was born in South Africa and became a U.S. citizen as an adult.

The series of political scandals surrounding Tesla's CEO has had a negative impact on the company's shares: since the beginning of the year, they have fallen by more than a quarter, showing one of the worst results among the «Magnificent Seven» players. Some analysts even said that it was time for Tesla to be excluded from the G7 and suggested chipmaker Broadcom instead.

Over the past month, Tesla's securities have received five fewer «buy» tips: now about 45% of all analysts, who gave ratings to the company's shares, adhere to this recommendation. The rest are either neutral or advise to sell. The consensus price target of $311 implies a nearly 2% drop from the closing level of June 30.

This article was AI-translated and verified by a human editor