Tesla seeks UK electricity licence, challenging energy giants as European EV sales plunge

Elon Musk’s Tesla is preparing an audacious move into the British electricity market, even as the company faces a bruising slump in European electric vehicle sales.

The Texas-based manufacturer and energy firm has formally applied for a licence to supply electricity to UK households and businesses. A notice published by energy regulator Ofgem confirmed the application, which was lodged at the end of July by Tesla Energy Ventures and signed by Andrew Payne, head of the company’s European energy operations.

If approved, Tesla could start competing with the dominant players in Britain’s energy sector as early as next year. The move would position the brand — best known for high-performance electric cars — as a direct rival to established energy suppliers, at a time when household bills and energy market competition remain politically charged topics in the UK.

Tesla’s ambitions go beyond cars. The company already develops solar power systems and battery storage products, enabling households to generate and store their own electricity. Its US arm, Tesla Electric, has been operating in Texas since 2022, providing customers with tools to optimise energy use and even earn money by selling surplus power back to the grid.

The leap into the UK market mirrors Musk’s strategy of integrating energy supply with renewable technology, potentially turning homes into miniature power plants. If the plan proceeds, British households could one day run on Tesla-supplied electricity stored in Tesla batteries and generated by Tesla solar panels — an ecosystem designed to bypass traditional utilities.

However, Tesla’s energy push comes against the backdrop of stark declines in its core business. Figures from the Society of Motor Manufacturers and Traders (SMMT) reveal that Tesla’s new car registrations in the UK plummeted almost 60% in July to 987 units, compared with 2,462 in the same month last year.

The situation is no better in Germany, where sales sank by 55.1% year-on-year to just 1,110 units in July. Across Europe, the company is grappling with rising competition from cheaper Chinese electric vehicle manufacturers, whose aggressive pricing strategies have eroded Tesla’s market share.

Compounding the challenge is the polarising effect of Musk’s political alliances and public statements. His relationship with US President Donald Trump’s administration and a stream of incendiary remarks have fuelled criticism, potentially affecting consumer sentiment in key international markets.

Despite these headwinds, Tesla remains a formidable force in renewable energy innovation. Industry analysts say its entry into the UK power market could disrupt the sector, especially if combined with its cutting-edge energy storage solutions. The company’s vertically integrated model — producing vehicles, generating power, storing it, and now selling it directly — could appeal to environmentally conscious consumers looking for alternatives to traditional suppliers.

The Ofgem application provides few operational details, but the precedent set in Texas suggests Tesla could offer variable-rate plans, incentives for energy efficiency, and integrated support for home solar and battery systems.

Market insiders say Tesla’s timing may be opportunistic. Britain’s energy market is still recovering from the turbulence of recent years, which saw dozens of smaller suppliers collapse amid wholesale price spikes. Large incumbents remain vulnerable to disruption, and a high-profile entrant like Tesla could quickly grab attention.

Whether UK consumers are ready to trust Musk with their energy supply remains to be seen. But if Ofgem approves the licence, the first households could be powered by Tesla electricity within months — a development that could upend both the automotive and energy landscapes in Britain.