Tesla EU Sales Are Down 40% & Market Share Shrinks, and Asian Market Gains

In early 2025, Tesla’s sales in Europe dropped by 40%. That’s a big fall for one of the world’s most famous electric car brands. It’s not just about fewer people buying Tesla; it’s about how fast the competition is catching up.

Asian carmakers like BYD, Hyundai, and NIO are now rising fast. They offer cheaper models with solid features. European buyers are noticing.

At the same time, oil prices are going up again. Normally, that should push more people toward electric cars. But there’s a twist: high oil prices also raise costs for car production and global shipping. That makes electric cars more expensive, too.

So now, we’re in a tough spot. Tesla is losing ground in Europe. Asia is growing strong. And global price changes are shaking up the market. 

Let’s evaluate what’s really going on and why Tesla might need to change its game fast.

Tesla Faces Strong Headwinds Globally

In May 2025, Tesla’s sales in the European Union plunged by over 40% compared with the previous year. Registrations dropped to 8,729 cars, wiping its market share down to under 1%. This marked the fifth straight month of decline as EV sales across Europe continued rising. 

What’s Happened in Europe

We see Tesla’s usual market boost fall flat in Europe. Tesla’s newer Model Y refresh did not reverse the slide; April sales fell nearly 50%, even as the total BEV market grew by 28%.
Consumers are choosing alternatives, from German legacy brands to cost‑effective Chinese EVs.

Asian EV Brands Gaining Fast

Companies from Asia are moving in quickly.

• BYD overtook Tesla in European sales by April. Their budget EV, the Dolphin Surf, launched at under $26,000 in Europe and delivers 200+ miles of range, soon pushing 305 miles for just $30,000.

• Other Asian brands like Hyundai/KIA have solid EV lineups. The Hyundai Ioniq 5 sold over 16,500 units in Europe in 2024 and remains a strong choice.

Europe is responding to their better value offers and wider range.

Tesla’s Asian Position Under Pressure

Tesla once had a strong lead in China. But now local rivals are stealing the spotlight. BYD remains China’s top EV seller, producing over 4 million vehicles in 2024, dwarfing Tesla.

In Southeast Asia and India, Tesla hardly has a presence. Here, Chinese and Korean brands dominate with appealing prices and local expansions.

Oil Prices Adding a Twist

Oil prices hover around $68/barrel. Usually, that would push more people into EVs. But the truth is trickier.
Higher oil prices lead to higher transport and manufacturing costs. That can increase EV prices and strain supply chains. So while the EV shift continues, it’s happening under more cost pressure.

Why This Matters for Tesla

European sales hit a wall, but Europe still matters:

• Tesla's Berlin Gigafactory is under-used. Poor factory utilization hurts margins.

• Tesla’s pricing strategy is weakening. A €2,000 Model Y discount in Germany yielded just 900 extra sales.

• Consumer response is also shifting. Tesla faces legal action in France over self-driving claims and backlash from Musk’s political ties.

What Tesla Could Do?

To regain ground, Tesla might need to:

• Launch a competitive mid‑range EV in Europe.

• Localize prices or form partnerships.

• Improve Autopilot transparency to regain trust.

• Expand affordable models quickly in Asian markets.

Wrap Up

The EV wave is growing, but it's not a one‑horse race. Europe is moving on from Tesla, Asian manufacturers are growing fast, and energy costs are adding uncertainty.

Our view: Tesla must adapt now. Buyer preferences and market forces are changing. And only those who evolve will win.

Frequently Asked Questions (FAQs)

Why are Tesla sales dropping in Europe?

Tesla sales are dropping in Europe for several reasons:

1. Asian brands like BYD, NIO, Hyundai, and Kia offer more affordable EVs with similar or better features.

2. Tesla’s cars are still seen as premium, but many European buyers are moving toward budget-friendly electric options.

3. Some European consumers are uncomfortable with Elon Musk’s political views and Tesla's marketing claims (especially around "self-driving").

4. Countries like France and Germany are pushing buyers toward local or cheaper EVs through updated subsidy programs.

5. Tesla has faced court action in France and delays in expanding operations from its Berlin Gigafactory.

Did Tesla sales sink 45 percent in Europe?

Yes. According to the European Automobile Manufacturers Association (ACEA), Tesla sales dropped by 45% to 50% in May 2025 compared to the same month in 2024.

Have Tesla sales fallen by nearly 50% in Europe?

Yes. In fact, in April and May 2025, Tesla’s EU registrations fell by about 47%-50%, while the overall electric vehicle (EV) market in Europe actually grew by over 28%. This clearly shows that Tesla is losing market share, not just riding out a weak market.

Are Tesla sales up or down (globally)?

• In Europe: Down - sharply falling since the start of 2025.

• In China: Mixed - still strong, but BYD is leading the EV race now.

• In the U.S.: Slight decline, especially after price cuts failed to boost demand.

Globally: Tesla is under pressure - it's losing lead positions in key regions due to high prices, strong rivals, and brand perception issues.