Tesla’s Prolonged Sales Decline
Tesla’s sales in Europe continue to decline amid growing competition from both European automakers and Chinese electric vehicle manufacturers. Tesla’s European registrations have fallen 37.1% year-to-date to 75,196 units, highlighting a worrying prolonged slump despite overall growth in electric vehicle sales. In May 2025 alone, Tesla’s European registrations dropped by nearly 28% compared to the year before, totaling just 13,863 units according to data from the European Automobile Manufacturers Association (ACEA).
Across Europe, markets such as France, Germany, and the United Kingdom experienced significant drops, declining 67%, 36%, and 45% respectively, compared with May 2024. This decline stands in sharp contrast to the overall growth of the European EV market, which surged by over 25%. Industry observers suggest multiple factors are at play, including increased competition, an aging Tesla model line-up, and reputational damage linked to CEO Elon Musk’s political engagement.
“Tesla has positioned itself as a highly innovative brand, but its current struggles underscore the company’s need to swiftly adapt its strategy in a rapidly evolving European market,” said automotive analyst Martina Schmidt.
Norway was among the few bright spots for Tesla in Europe last month, where sales of the refreshed Model Y surged dramatically by 213%. However, the new Model Y has yet to see widespread distribution in larger European markets, leaving dealers burdened with older inventory.
Mounting Competition from Chinese Automakers
Chinese automakers are rapidly expanding their influence and gaining a significant foothold in Europe’s burgeoning EV market. Companies such as BYD and SAIC have made considerable gains, outselling Tesla, particularly in Germany where they have achieved more than double Tesla’s sales. Chinese brands now represent nearly 6% of the total European EV market, bolstered by affordability, new technologically advanced models, and swiftly expanding dealer networks.
This increased competition poses a substantial threat to Tesla’s previously dominant position. European consumers, increasingly sensitive to price and value, appear to favor the competitively priced Chinese models, causing Tesla’s market share to shrink to just 1.2%.
“The rise of Chinese EV makers in Europe highlights a shifting consumer priority towards sustainability and cost efficiency, both areas where Chinese brands have made significant headway,” notes Dr. Jonas Müller, a researcher specializing in international economics at the University of Berlin.
Tesla’s declining market share is compounded by the highly competitive nature of the European auto market. Traditional automakers, including Volkswagen and Stellantis, also continue to improve their EV offerings, presenting a multifaceted challenge for the US-based Tesla.
Impact of Elon Musk’s Political Activities and Future Challenges
Industry experts suggest that Tesla’s ongoing struggles are also linked in part to CEO Elon Musk’s political commentary and involvement in controversial political initiatives. Controversies surrounding Musk’s political activities, including his association with the Department of Government Efficiency (DOGE) and political endorsements, have influenced consumer perceptions. Public protests and boycotts at Tesla dealerships across Europe have been reported, adding further strain to the company’s declining European sales.
Tesla’s ongoing operational issues extend beyond Europe. The National Highway Traffic Safety Administration (NHTSA) recently initiated an investigation into the company’s robotaxi pilot in Austin. Videos circulating online captured Tesla vehicles behaving erratically, driving on the wrong side of the road, and stopping abruptly at intersections, raising safety concerns and further exacerbating the negative public perception.
The company faces additional scrutiny on its home turf, with investors closely monitoring its upcoming Q2 delivery report. Tesla reported global deliveries of 336,681 units in the first quarter of 2025, representing its worst quarterly performance in two years, down approximately 13% from last year. These compounded challenges have adversely affected Tesla’s stock price and investor confidence.
“Tesla’s performance over the next quarters will be critical. They must demonstrate innovation and reliability to reassure investors and consumers alike. Any further missteps could significantly damage their market position,” commented financial market expert Lucy Andrade.
As Tesla navigates these complex challenges, its strategic response in the coming months will be closely watched. The European market, characterized by increasing competition and shifting consumer preferences, presents a crucial battleground for the EV giant. The success and timely rollout of Tesla’s refreshed Model Y and future models will likely be decisive factors in shifting the company’s trajectory and reclaiming its status in the highly competitive European electric vehicle market.