Elon Musk needs to accept the harsh truth: Tesla’s era of dominance is over!

After years of breakneck growth, Tesla’s car business is shrinking even as the global electric vehicle (EV) market continues to expand. Global deliveries are expected to fall 7% this year, following a 1% decline in 2024, according to forecasts from Visible Alpha.

That would mark two straight years of declines, despite the company boasting record deliveries in the third quarter. That record was inflated by a rush of US buyers to get their cars before a crucial federal tax credit expired on September 30.

The slowdown is in stark contrast to Elon Musk’s promises to shareholders late last year that he expected sales to grow 20% to 30% by 2025, a target that has now disappeared from Tesla’s official guidance.

From vague statements about a growth recovery in January, the company later withdrew that outlook and now ties any future expansion to macroeconomic conditions, advances in autonomous driving technology and the ability to ramp up factory output.

Europe has seen the sharpest reversal, with Tesla sales there plunging 48.5% year-on-year in October, according to the European Automobile Manufacturers Association. Year-to-date, Tesla production in the region is down about 30%, while EV sales across the industry are up 26%.

The decline follows a tumultuous period that began late last year when Musk’s public praise of far-right figures sparked protests and boycotts in many European markets, and his political silence in recent months has failed to translate into a commercial recovery.

Europe’s EV showrooms no longer resemble the landscape Tesla helped define a decade ago, with more than a dozen sub-$30,000 EV models and a strong push from Chinese manufacturers.

Analysts point out that Tesla is essentially competing with just two mainstream models, the Model 3 and Model Y, and has recently launched a cheaper, stripped-down Model Y variant to stimulate demand. In the UK, where there are more than 150 electric car models on sale, Electrifying predicts there will be at least 50 new electric cars launched next year, none of which will be Tesla-branded.

In China, the epicenter of the global electric car race, Tesla, while still a formidable player, is losing market share. Its deliveries there fell 35.8% in October, hitting a three-year low, down 8.4% year-to-date.

Tesla is facing relentless competition from domestic manufacturers, who are constantly introducing new products, cutting prices, and upgrading technology to suit local tastes. Tesla’s Model Y is under particular pressure from new rivals like Xiaomi, which launched its YU7 crossover in June, targeting the same mid-size and affordable SUV segment, and the return of established brands like Chery.

In the US, Tesla’s sales have also been volatile: they jumped 18% in September thanks to a run-up to the expiration of tax incentives, but then plummeted 24% in October. Instead of a major product overhaul, Tesla responded with price adjustments, cutting some Model 3 and Model Y configurations by about $5,000 to make up for the loss of tax incentives.

While analysts say Tesla needs a completely new, low-cost car to revive sales, Musk has repeatedly emphasized self-driving robotaxis and humanoid robots, betting the future on software and AI, raising concerns among investors that the company is neglecting short-term product cycles.

Tesla did not respond to requests for comment, leaving the image of an industry-defining giant struggling in a market crowded with cheaper, nimbler rivals, with its futuristic bets yet to deliver real-world results in showrooms.