U.S. sales for Tesla plunged to a near four-year low in November, dropping to approximately 39,800 vehicles, according to a Reuters report.
This represents a sharp decline of nearly 23% from the 51,513 units sold in November 2024 and marks the company’s lowest monthly sales volume in the U.S. since January 2022, according to exclusive estimates from Cox Automotive.
The slump occurred despite Tesla’s proactive launch of new, cheaper “Standard” versions of its best-selling Model Y SUV and Model 3 compact sedan in October, which were priced approximately $5,000 below the previous base models.
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The Impact of the Tax Credit Expiration
The primary headwind for the entire U.S. Electric Vehicle (EV) market was the expiration of the $7,500 federal tax credit at the end of September, which was rescinded by the Trump administration. This incentive’s end triggered a rush of purchases in Q3 2025 and an anticipated “hangover period” in the following months.
The overall U.S. EV market was hit severely, with sales plummeting by more than 41% in November. However, while Tesla’s own sales declined, the relatively smaller percentage drop allowed the company to significantly increase its market share to 56.7%, up from 43.1% a year earlier. This suggests that despite its struggles, Tesla is weathering the market contraction better than most of its competitors.
Cannibalization and Weak Demand for Standard Variants
The core strategic challenge for Tesla is that the introduction of the cheaper Standard variants has failed to generate sufficient incremental demand to offset the loss of the tax credit.
“The drop certainly shows there is not enough demand for the Standard variants that were supposed to boost sales after the tax credit expiry,” said Stephanie Valdez Streaty, Cox’s director of industry insights.
She added that an additional concern is that sales of the lower-cost Standard versions are cannibalizing demand for the higher-margin Premium versions, particularly the Model 3.
To combat what analysts view as weak demand, Tesla is resorting to aggressive incentives, including offering 0% financing on the Standard Model Y—an unusually steep promotion for a variant that only began deliveries a month prior. The availability of both Standard models in inventory with reduced pricing further supports the view that the market is not absorbing the new supply as quickly as anticipated. Shawn Campbell, an adviser at Camelthorn Investments, noted, “I think the bottom line is, if the demand was there they wouldn’t be offering 0% financing.”
Old Models Meet New Competition
The sales slowdown extends a broader trend for Tesla. Deliveries fell for the first time in years during 2024 and are expected to drop again this year, pressured by high borrowing costs and intensifying global competition.
Tesla’s current lineup is aging, with minor refreshes, and the company has not introduced a completely new volume vehicle since its struggle with the Cybertruck pickup. The long-term $1.4 trillion valuation of the company is tied less to current vehicle sales and more to the successful transition to robotaxis and humanoid robots. However, without compelling new vehicles, the near-term revenue stream is under threat.
Cox’s Streaty was direct in her assessment of the competitive threat: “Tesla has a serious challenge on its hands next year when several other automakers are planning to roll out cheaper vehicles that are also full of fun features. So the answer is that Tesla needs a completely new vehicle in its fleet. Period.”
Adding to the demand issue, CEO Elon Musk’s political rhetoric and associations have reportedly sparked protests and hurt Tesla’s brand image, further complicating the sales environment in a market where brand perception plays a significant role. The solution, analysts conclude, must ultimately come in the form of “new, fresh models” to reinvigorate demand and sustain momentum.