Tesla sales plunge in Europe even as EV market booms

Tesla's vehicle sales collapsed in Europe in July as the electric-car maker continues to struggle to match demand with supply. Deliveries fell in all of the region's big EV markets as the U.S. company prioritized sales in its home market. Tesla is losing ground in an EV market that is growing fast after European governments boosted incentives for electric cars to stimulate demand and reduce climate-changing CO2 emissions.

Sales of battery-powered cars in Europe rose 34 percent to 217,495 in the first half, according to data from JATO Dynamics market researchers. Tesla's European sales were down 18 percent to 37,251 during the period. Tesla's falling sales come as more car buyers in Germany and France, the region's two largest passenger-car markets, are switching to EVs after their governments boosted incentives to stimulate demand.

Their purchase subsidies are now among the most favorable in the world. In Germany, Tesla registrations plunged 67 percent to 203 in July compared with the same month last year, data from the KBA motor vehicle agency showed. Total market sales of battery-powered cars grew by 182 percent during the month for a 5.3 percent German market share.

Tesla's lowest-priced Model 3 at 39,990 euros is eligible for a 9,000-euros grant in Germany. Tesla's German registrations fell 22 percent to 5,306 in the first half. Tesla registered just 119 Model 3s in France in July, according to industry association CCFA, after registering 620 in June.

The Model 3 is the 62nd best-selling passenger car in the country through July, with 3,681 registrations. Tesla sold a total of 6,455 Model 3s in 2019.  Tesla was the only brand to gain sales in the first half, according to a report in the French magazine L'Argus, with a 7.5 percent increase over 2019. Sales of the Model 3 increased by 11 percent to 3,562 in the first half.

The least-expensive Model 3, which has a retail price of 49,600 euros in France, is eligible for a government-backed scrapping program for older vehicles. Tesla models are not eligible for a government bonus for electric vehicles, which applies to models with a price of 45,000 euros or less. Tesla deliveries also plunged in northern European markets where green-minded consumers are generally more favorable to EVs.

In Norway, the automaker's sales fell 93 percent. In Sweden sales were down 98 percent. Tesla's volume dropped 94 percent.

The data comes from car sales aggregator Bestsellingcarsblog.com. Tesla doesn't publish its own sales figures. The Renault Zoe passed Tesla's Model 3 to become Europe's best-selling full-electric vehicle in the first half.

The fall in Tesla's vehicle sales in Europe in July is due to the company's policy of switching its limited production capacity to prioritize either the U.S. or Europe depending on quarterly timings, according to a source with knowledge of Tesla's strategy. The price of Tesla stock is very sensitive to quarterly deliveries. For example, shares rose after the company said its second-quarter deliveries rose to 90,650, beating analyst expectations.

Morten Grove, who tracks cargo ships transporting Tesla vehicles between California and Europe, posted on Twitter that Tesla's first third-quarter shipment of cars for Europe arrived in Zeebrugge, Belgium, on Aug.

5. Another ship is expected on Aug.

21, Grove said. Tesla is currently building a new factory near Berlin that should help smooth out supply and demand in Europe.

The company is moving into Germany's heartland to challenge Volkswagen Group, BMW Group and Daimler's Mercedes-Benz as the country targets a huge increase in electric-car sales.

Tesla has said it wants to finish the factory by the middle of next year.

"The goal at Tesla seems to be to beat the construction time for the Gigafactory 3 in Shanghai," Joerg Steinbach, economy minister for the state of Brandenburg where the plant is located, was quoted as saying in the Welt am Sonntag newspaper. "According to my observation, this could very well succeed."

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