During July, Tesla saw a sharp drop in sales in some European countries, highlighting a delicate moment for the company. Even with the launch of the revamped Model Y, research shows that factors such as Musk’s controversial image, regulatory pressure, and cheaper competing brands are challenging Tesla’s market position, especially in China.
Tesla is losing momentum in Europe
Registrations of new Tesla TSLA.O cars in several key European markets fell in July, despite a revamp to its signature Model Y, as the EV maker struggles with a backlash against CEO Elon Musk’s political views, regulatory challenges, and rising competition. Tesla’s aging lineup is facing a wave of low-cost EV rivals, especially from China. It is rolling out a revamped Model Y and starting to produce a new, cheaper model, but production of that will only ramp up next quarter, later than initially expected.
The brand’s registrations – a proxy for sales – fell 86% year-on-year in July to 163 cars in Sweden, 52% to 336 cars in Denmark, 27% to 1,307 in France, 62% to 443 in the Netherlands and 58% to 460 in Belgium, official industry data showed, marking a seventh straight monthly drop in all of those countries. They also fell by 5% to 457 cars in Italy and 49% to 284 in Portugal. Tesla sales dropped by over a third in Europe in the first six months of the year.
Norway and Spain bucked the trend, with Tesla’s July registrations up 83% and 27% to 838 cars and 702 cars, respectively. Spain recorded a 155% jump in total sales of electrified cars – either battery electric or plug-in hybrid.
The renewed model was not able to stop global transformations
With no more 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, Musk acknowledged in July that Tesla TSLA.O could have “a few rough quarters”. He said tough automated driving regulations in Europe made it harder to sell the Model Y in some countries, as the vehicle’s optional supervised self-driving is “a huge selling point”.
Tesla began selling a long-range four-wheel version of the revamped Model Y in Europe in March 2025, while sales of the two rear-wheel drive variants began in May. Model Y registrations in Sweden and Denmark fell by 88% and 49% respectively in July, while they jumped more than fourfold to 715 cars in Norway.
Norway is driven by local incentives
In Norway, Tesla’s positive performance contrasts with the rest of Europe. Robust tax incentives, a well-established electric vehicle infrastructure, and aggressive financing campaigns have all helped stimulate local demand. Tesla has been successful in the country, which has been leading the transition to EVs for years, despite a competitive environment.
Norway, where almost all new cars sold are fully-electric and where Tesla has been the best-selling brand since 2021, has seen a surge in orders for the model since May after the automaker launched 0% interest loans in some Nordic countries to drum up demand.
Specific adjustments to the supply can have immediate effects on sales, but beyond price concerns, there’s a drive for innovation and autonomy. Tesla’s success in Norway may be positive, but it doesn’t offset the company’s declining sales in other countries. This should be an incentive for the company to make up for the remaining sales to stay at the top.
Current efforts may not be enough to rescue Tesla in Europe
Tesla still faces a challenging scenario in Europe, despite recent adjustments. Combined with the end of the American subsidy and the growing presence of Chinese competitors, the brand is under pressure. To reverse this situation, the company will need to revise its regional strategy to win back European consumers.
GCN.com/Reuters