Automotive finance review: BEV sales decline in France prompts Tesla to introduce successful finance offers in September

This article is part of our Automotive finance review series. Find out more about Monthly Payment trends here.

The French market has seen growth in battery electric vehicle (BEV) registrations in the first eight months of this year. However, while the demand for BEVs among private retail customers in France continues to grow, with a 12% increase year-to-date as of August 2024, it has not expanded at the pace originally hoped for by vehicle manufacturers.

Year-to-date BEV retail registrations – Top 10 brands in France

Year-to-date in August, the Jeep brand showed the most significant improvement in BEV retail sales in the top ten performers, achieving a 420% increase in new registrations, though this improvement came from a low base in 2023.

BMW was not far behind Jeep, with growth of 402% over the same period. The brand should legitimately be considered as a direct premium competitor to Tesla.

Among France’s top ten BEV retail brands, MG saw the biggest market decline, with a 46% drop.

Although it remained the third best-selling brand, Tesla saw a year-on-year decrease of 40%, slipping behind Peugeot and Renault in their home market.

Challenges facing Tesla’s Model Y

In 2023, the Tesla Model Y was the best-selling battery electric vehicle in France, with approximately 37,000 new registrations, capturing a 12.4% share of the BEV market. The private retail sales channel accounted for 70% of Model Y's sales.

However, 2024 has proven more challenging for the Model Y, with new registrations down by 34% year-to-date as of August, reducing its BEV market share to 8%. Despite this decline, it has remained the second most popular BEV model this year in France, trailing only the Peugeot 208.

The sales decline of the Model Y in France and for the Tesla brand overall is not an isolated case. Similar Model Y trends are evident across other key European markets, including Great Britain with Germany experiencing an even steeper drop in private retail sales at 41%.

The current Model Y design, dating back to 2019-2020, has seen limited updates. While a significant facelift (codename: project juniper) has been anticipated throughout 2024, Tesla has not yet announced a specific launch date for the updated model. This uncertainty may have led some potential buyers to delay their purchase until the refreshed Model Y becomes available, which is expected to be in the first half of 2025.

Additionally, consumer choice has increased over the last year. Newly launched, well-designed, and competitively priced BEV models have entered the market, often available on compelling finance contracts, such as easy lease and contract hire. Offers from BMW, Volvo, Stellantis and Renault have gained traction over the past 12 months, alongside Tesla’s existing deals.

Tesla introduces finance offers for September to boost sales

In response to these challenges, Tesla introduced short-term finance offers, available in September 2024 only. This included both easy lease and classic credit products for retail customers in the French market. The objective was to stimulate demand and counter the decline in Model Y sales.

This strategic move also aimed to clear inventory buildup of the current Model Y versions in September, with a view to closing the order books for the third quarter of 2024 on a strong note. It also reflected anticipation of the arrival of the restyled Model Y next year.

Tesla’s headline LOA (easy lease) offer, which gave the customer a purchase option if they wished to own the vehicle, started at a monthly payment rate of €299 per month with an OEM discount, or ‘Tesla bonus’, of €4,000. This discount was on top of the €4,000 ecological bonus available from the government for qualifying versions. All vehicles were to be delivered to customers by 30^th of September.

Tesla’s headline classic credit (personal loan) offer at 0% APR, which is rare in the current high interest rates environment, underscores the amount of monetary support that Tesla is willing to put on the table to shift Model Y inventory. However, this should not come as too much of a surprise, given that well over half of Model Y retail sales so far this year have been through the classic credit product route.

The fact that there was no LLD (contract hire) headline offer for private retail customers would be unusual for most other automakers in France, but not for Tesla. Contract hire currently accounts for less than 2% of the brand’s retail sales.

Normalized comparison of Tesla’s Model Y (LOA) offer for (propulsion) BEV RWD version (48mth/40 000km)

Tesla’s automotive finance offer successfully boosts Model Y sales

The preliminary release of the French new car registration figures for September by the CCFA on the 1^st of October appears to confirm that Tesla’s finance strategy succeeded. The short-term monthly payments offer increased Model Y sales going into the last quarter of 2024.

September’s total of 4,592 Model Y new registrations was the highest monthly total achieved by Tesla in 2024 and represents 24% of all Model Y sales so far this year.

Nevertheless, until the finalised September data for the French market becomes available later this month, details around the sales remain unknown. Further data will reveal the split in volumes achieved between retail and business sales, enabling us to measure the full impact of the exclusive retail offers.

Additionally, the confirmed data will provide insights into which finance offers were most popular. Was the surge in sales driven primarily by the ultra-competitive LOA (easy lease) offers uptake or by customers taking advantage of the rare 0% classic credit (personal loan) product from Tesla?