As Tesla's sales in Europe deteriorate, Musk accelerates the expansion of autonomous driving, with the Austin Robotaxi fleet set to double

Faced with the global challenges of traditional automotive sales, Tesla and its CEO Elon Musk are accelerating their focus on futuristic projects such as Robotaxi.

Latest data shows that Tesla's sales in the European market are sharply deteriorating. According to data released by the European Automobile Manufacturers Association on Tuesday, the company's sales in Europe fell by 48.5% year-on-year in October. So far this year, Tesla's cumulative sales in the region have declined by about 30%, while the overall electric vehicle market in Europe has seen a robust growth of 26%.

In stark contrast to the dismal sales data, Musk is actively advancing his autonomous driving business. He announced on social media platform X on Tuesday that the Tesla Robotaxi fleet in Austin, Texas, will double in size in December. Previously, Tesla launched its autonomous driving service in Austin in June and received permission to operate ride-hailing services in Arizona last week.

The weak performance in the European market indicates that the sales turmoil that began for Tesla at the end of last year is unlikely to be reversed in the short term, suggesting that the issues extend beyond political controversies to deeper fundamental challenges. Globally, according to Visible Alpha, after a 1% decline in 2024, Tesla's global deliveries are expected to drop another 7% this year, raising market concerns about the motivations and risks behind its strategic shift.

European Market Stalls, Competitors Closing In

Tesla faces particularly severe challenges in Europe. Analysts point out that as competitors launch a plethora of lower-priced, technologically superior electric vehicle models, Tesla's reliance on the Model 3 and Model Y as its only mass-market offerings has become outdated. Currently, there are over a dozen electric vehicle models in the European market priced below $30,000, with more new cars set to launch, including innovative designs and a diverse range of options from Chinese brands.

According to analysts interviewed by Reuters, they do not see Tesla having a quick turnaround plan in Europe. In the UK, there are over 150 electric vehicle models available from various brands, including new Chinese competitors. Ginny Buckley, CEO of the electric vehicle purchasing advice website Electrifying.com, stated that at least 50 new electric vehicle models are expected to launch next year, “but none of those 50 will be Tesla.”

The reversal of the competitive landscape is already quite evident. In October, Chinese brand BYD's sales in Europe reached 17,470 units, more than double Tesla's sales for the same month. The German Volkswagen Group has become a more pronounced symbol of Tesla's declining dominance, with its electric vehicle sales soaring by 78.2% year-on-year to 522,600 units as of September this year, three times Tesla's sales. Ferdinand Dudenhoeffer, head of the CAR Institute at Duisburg-Essen University, commented:

“Musk's problem is not only with his own cars and Chinese automakers, but also with European automakers that have caught up.” In the U.S. market, although Tesla's sales surged by 18% in September as consumers rushed to purchase vehicles before the $7,500 tax credit policy expired (according to research firm Motor Intelligence), this trend quickly reversed in October, with sales dropping by 24%. Executives in the automotive industry generally expect the electric vehicle market to continue facing headwinds. However, the reduction in electric vehicle production investments by traditional automakers such as General Motors, Ford, and Honda, along with Tesla's recent introduction of new Model Y and Model 3 vehicles with price cuts of about $5,000, may help stabilize some market share.

Strategic Focus Shift, Musk Bets on Autonomous Driving

In the face of sales difficulties, Musk has not focused on launching new models catering to the mass market but has instead turned to cutting-edge fields such as autonomous driving Robotaxi and humanoid robots. Analysts believe that Tesla urgently needs a new vehicle to boost sales, but there is currently almost no evidence that the company has plans to develop a new passenger vehicle.

In October, Musk stated that he expects Robotaxi to operate without safety drivers in most areas of Austin this year and to cover eight to ten metropolitan areas by the end of the year. Despite a history of unfulfilled promises, the Robotaxi industry is experiencing a revival as Alphabet's Waymo and Amazon's Zoox accelerate their expansion.

Notably, Musk's recently approved compensation plan seems to confirm this strategic shift. The plan does not require Tesla to achieve significant sales growth; as long as the company delivers an average of 1.2 million vehicles annually over the next decade and sees an increase in stock price, Musk can unlock billions of dollars in rewards. This delivery target is even about 500,000 vehicles lower than the company's projected sales for 2024, indicating that his personal incentives are now more closely tied to future technological visions rather than traditional automotive sales growth