Tesla’s share of the electric vehicle market in Europe significantly declined to 10% in February, but it is believed that this decline could represent the lowest point for the brand, as the new Model Y begins to reach customers who anticipated its launch in March.
Recent data has provided a comprehensive view of Tesla’s decreasing sales and market presence in Europe. Although the situation appears challenging, there is optimism among investors that the decline might be stabilizing.
Globally, Tesla’s sales have been affected partly by the transition to the updated Model Y, known for being the best-selling car worldwide with approximately 1.1 million units produced. The model changeover influenced demand, as many customers postponed purchases until the release of the new version.
According to data published by the European Automobile Manufacturers Association (ACEA), registrations of new Tesla vehicles in Europe decreased by 40% last month to about 16,900 cars, compared to the same period in the previous year. Meanwhile, the overall market for fully electric vehicles grew by 26% to nearly 165,000 units, reducing Tesla’s market share from 21.6% in February 2024 to 10.3% in the current year.
The ACEA reported a 43% drop in Tesla registrations to 26,619 vehicles for the first two months of 2025 combined. The association compiles data from the European Union’s 27 member states and includes Norway, Iceland, Switzerland, and the UK, providing a comprehensive view of market demand in Europe.
In addition to the Model Y transition, Tesla’s production in Europe experienced scheduled disruptions due to necessary factory retooling. Market analyst Felipe Muñoz from JATO noted that brands with limited model lineups, like Tesla, are particularly susceptible to registration declines during model updates.
Beyond the technical and production challenges, there are indications of a broader decline in brand perception linked to actions by Tesla CEO Elon Musk. Musk’s advocacy for reforms in Western political systems has notably included interference in Germany’s elections, favoring the nationalist Alternative for Germany party. This political stance may have contributed to the drop in demand, particularly in Germany.
Tesla’s sales in Germany fell by over 70% to just 2,700 vehicles in the first two months, compared to 5,300 cars sold in the UK. The substantial decrease in Germany might be attributed more to Musk’s controversial political involvement than to the Model Y transition.
Looking ahead, two factors may improve Tesla’s situation in Europe. The company has now overcome its most challenging year-on-year comparisons, given the substantial decline in March 2024. Additionally, with the production halt over, the refreshed Model Y units can potentially meet market demand more effectively.
In China, Tesla experienced its best week of 2025 as 17,400 new cars were registered. Analysts at Piper Sandler view this as a possible sign of recovery in demand following the February production stoppage in Shanghai. With more time left in the first quarter of 2025, there is potential for Tesla to achieve stable year-on-year growth in the Chinese market.
