Despite Musk's previous expectations that Tesla's performance in the European market in the second quarter would be better than the first quarter, the latest data shows that Tesla's situation in Europe remains challenging.
Data released by the European Automobile Manufacturers' Association (ACEA) on Wednesday showed that in April, Tesla's new car registrations in Europe were only 13,951, a 2.3% decrease from the same period last year, marking the lowest level since January 2023.
In contrast, the overall electric vehicle market in Europe achieved a 14% year-on-year growth in April. Shipments from Tesla's Shanghai factory also declined.
During the earnings call in April, Tesla announced that its first-quarter net profit fell by 55% to $1.13 billion, and the operating profit margin further decreased from 8.2% in the previous quarter to 5.5%.
Musk had previously stated that in the second quarter, Tesla would overcome the negative factors from the first quarter, such as interruptions in the supply chain and a suspected arson incident near the German factory. However, Tesla's situation did not improve as he had anticipated.
In recent months, some countries including Germany and Sweden have stopped or reduced subsidies for electric vehicles, casting a shadow over the growth of electric vehicle sales in Europe.
In Germany, the largest car market in Europe, most brands have been impacted by the subsidy policy cutbacks, but Tesla's performance last month was particularly weak. In April, the registration of electric cars in Germany remained relatively stable, while Tesla's sales fell by 32%.
In the UK market, Tesla's new car registrations in April dropped by 25%, with a cumulative decline of 14% in the first four months of this year.
In addition to the challenge of declining sales in the overall European market, Tesla also faces the anger of key customers - leasing companies. If not handled properly, its situation in the European market will further deteriorate.
Wall Street News has previously mentioned that leasing companies account for nearly half of Tesla's sales in Europe. While Tesla's frequent price reduction strategies have stimulated sales, they have also significantly reduced the value of its vehicles, leading to damage to leasing companies' profits in Europe.
The business model of leasing companies involves purchasing new cars and then leasing them to consumers. When determining leasing prices, leasing companies consider the expected residual value of the vehicles, which is the estimated resale value of the vehicles at the end of the lease term. The profitability of leasing companies largely depends on the realization of these residual values.
However, if new car prices in the market suddenly drop significantly, it will have a negative impact on the residual value of leased vehicles. At the end of the lease term, the actual resale price of these vehicles may be much lower than the initial estimate. This depreciation of residual value directly leads to financial losses for leasing companies.
It has been reported that Tesla may offer specific discounts to leasing companies, but these discounts may further harm its profit levels

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In April, Tesla's new car registrations in Europe were only 13,951 units, a 2.3% decrease from the same period last year, marking the lowest level since January 2023

European car market is growing, but Tesla's sales are declining against the trend