Tesla registrations plunge in Musk’s top European markets

Source: By Stefan Nicola and Dana Hull, Bloomberg • Posted: Tuesday, March 3, 2020

Tesla Inc. has had a rough couple months in two European markets Elon Musk counted on for growth last year.

The U.S. carmaker registered just 83 new cars in Norway last month, compared with 1,016 vehicles during the same period last year, according to data from the country’s transport authority. In the Netherlands, registrations plunged 68% to 155 units.

The results are a bad omen for two of only four countries for which Tesla breaks out revenue on a quarterly basis. Registrations in Norway and the Netherlands during the first two months of the year were down 77% and 42%, respectively. And that’s against a soft year-ago comparison — sales of the Model 3 were just getting underway in early 2019 and didn’t pick up the pace until later in the year.

Norway started showing signs of saturation last year after having led Western Europe’s electric-car market for the past half decade. In the Netherlands, a favorable tax rate expired at year-end. Similar issues contributed to a drop in revenue last year in the U.S., the first market for the Model 3, which fueled concerns that Tesla had reached a ceiling for demand of the car.

Revenue from the Netherlands and Norway rose 65% and 48% in 2019, helping counter a 15% drop in the U.S. — by far Tesla’s largest market. Germany will be a key market to watch in 2020 following the unveiling of a landmark climate-related stimulus package with subsidies aimed at boosting electric-vehicle sales. The country is now expected to overtake Norway as the regional battery-car leader.

Falling sales in Europe would make it harder for Musk to make up for slack demand in China, where industrywide sales have plummeted due to the spread of the coronavirus. A Morgan Stanley analyst cautioned investors against buying Tesla shares following last week’s rout, predicted the first quarter will be challenging in part due to weaker demand in some European markets.

The stock rose as much as 11% yesterday after last week’s 26% plunge. The stock has been on a tear starting late last year as Musk has accelerated the production schedule for the Model Y, the crossover SUV that he sees becoming the company’s new top seller.

But the Model Y isn’t expected to contribute significantly to deliveries in the first few months of the year, and Tesla Chief Financial Officer Zachary Kirkhorn said in January that first-quarter sales probably will slow down because of seasonality.