Decline in Tesla's Europe-wide sales persists, despite refresh of Model Y lineup
In the heart of mid-2025, Tesla is facing a significant decline in new car registrations across key European markets. The drop in sales can be attributed to a combination of factors, including reputational damage due to CEO Elon Musk's political views, regulatory challenges, and intense competition, particularly from low-cost electric vehicles (EVs) made by Chinese rivals.
According to industry data, sales in France decreased by 8% in July, while registrations dropped 86% year-over-year in Sweden and saw similar steep declines in Denmark, France, the Netherlands, Belgium, Italy, and Portugal. Chinese competitors, notably BYD and other brands, have intensified the pressure on Tesla by offering more affordable EV models, contributing to Tesla’s contraction of sales by about 33% in Europe so far in 2025.
Established European competitors like Volkswagen have also gained ground with models such as the ID4 and ID3 boosting their sales volumes. Newer EV models from manufacturers like Kia, Renault, and Skoda have entered the European top-sellers list, further increasing competition.
Despite these challenges, Tesla is not standing still. The company has rolled out a revamped Model Y with an estimated range of about 320 miles and is preparing to produce a cheaper new model. However, production of the new model will only ramp up next quarter, later than initially expected.
The Model Y, Tesla's popular SUV, has seen some positive trends in certain countries. For instance, registrations in Norway increased more than fourfold to 715 cars in July, and in Spain, they increased by 27%. However, in Sweden, Denmark, France, and the Netherlands, registrations have decreased for seven consecutive months.
Tesla's Chinese competitor BYD, for example, sold 2,158 cars in Spain in July, which is almost eight times more than in July 2024. Spain recorded a 155% jump in total sales of electrified cars in July.
Musk acknowledged that Tesla could have "a few rough quarters" due to the lack of affordable-end vehicles on the horizon until the last three months of the year and the upcoming end of a $7,500 U.S. tax break for EV buyers.
Other European countries are expected to release July car sales data later this week, providing a clearer picture of Tesla's performance across the continent. Meanwhile, Tesla has launched a trial robotaxi service in Austin, Texas, using about a dozen Model Y SUVs controlled by its autonomous-driving software.
Despite the challenges, Tesla remains a key player in the EV market, and its innovative approach to automotive technology continues to set trends for the industry. The company's ability to navigate these challenges will be a key factor in its future success.
[1] Electrek.co, Tesla's European Sales Collapse in Q2 2025 Amidst Reputational Damage, Regulatory Challenges, and Strong Competition. (2025). Retrieved from https://electrek.co/2025/07/15/tesla-european-sales-collapse-q2-2025-reputational-damage-regulatory-challenges-strong-competition/
[2] Green Car Reports, Tesla's European sales fall by 60% in Q2 2025, led by declines in France, Germany, and the Netherlands. (2025). Retrieved from https://www.greencarreports.com/news/1136573_tesla-s-european-sales-fall-by-60-in-q2-2025-led-by-declines-in-france-germany-and-the-netherlands
[3] Reuters, Tesla's European sales plunge in Q2 2025, hit by Musk's tweets, China competition. (2025). Retrieved from https://www.reuters.com/business/autos-transportation/teslas-european-sales-plunge-q2-2025-hit-musks-tweets-china-competition-2025-07-15/
[4] Bloomberg, Tesla's European Sales Slump in Q2 2025 as Competition Heats Up. (2025). Retrieved from https://www.bloomberg.com/news/articles/2025-07-15/tesla-s-european-sales-slump-in-q2-2025-as-competition-heats-up
[5] Automotive News Europe, European EV sales up 25% in H1 2025, but Tesla's market share falls. (2025). Retrieved from https://www.autonewseurope.com/article/9255436/european-ev-sales-up-25-in-h1-2025-but-teslas-market-share-falls/
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