Tesla faces 45.2% decline in EU due to competition and Musk’s escapades

Tesla’s dominance in the European electric vehicle market took a significant hit in January 2025, as the company saw a staggering 45.2% drop in sales compared to the same period in 2024.

New data from the European Automobile Manufacturers Association (ACEA) reveal that Tesla sold just under 10,000 units in the region last month, down from over 18,000 the year before. This caused its market share to shrink from 1.8% to 1%.

The decline comes despite an overall increase in electric vehicle sales across Europe, which surged by 34% and now account for 15% of total new car registrations.

The overall European car market, however, struggled, with new registrations down by 2.8%, led by declines in France (-6.1%), Italy (-5.8%), and Germany (-2.8%). Spain was one of the few major markets to see growth, with registrations rising 5.3%.

Negative spiral

Tesla’s losses were particularly severe in key markets like Germany, which registered only 1,277 vehicles – the weakest performance since July 2021. Sales in France plummeted by 63%, further fueling concerns that the company is losing ground in Europe’s rapidly evolving EV landscape.

The negative spiral sent Tesla’s stock value beneath the threshold of 1 billion dollars. Over the past six months, Tesla lost one-third of its value.

Controversial political stances

Industry experts point to multiple factors that have caused Tesla’s struggles, including an aging product lineup, increased competition from both European and Chinese automakers, and, not the least, CEO Elon Musk’s controversial political stances, which have alienated consumers.

And not only in Europe. In Canada, 250,000 people signed a petition to withdraw Musk’s Canadian nationality, as he is regarded as trying to erase the country’s sovereignty.

Meanwhile, rival automakers capitalized on Tesla’s weakness. BMW, for instance, saw a 36% rise in EV registrations, delivering 13,715 units, surpassing Tesla for the month. Chinese brand MG, owned by SAIC, also made gains with a 36.8% increase in European registrations.

Tesla hopes to reverse its fortunes with the upcoming launch of the updated Model Y, built in its German Gigafactory and the world’s best-selling car.

Limited Full-Self Driving

In China, Tesla has introduced a restricted version of its Full Self-Driving (FSD) system, marking its most significant update to driver-assist technology in the market.

The timing is no coincidence, as Tesla, the most renowned advocate of autonomous driving, intensified its efforts in response to growing competition. Chinese rival BYD has recently raised the bar by integrating its sophisticated God’s Eye advanced driving aid across its vehicle lineup at no extra charge.

However, Tesla’s rollout has received mixed reviews. Many owners feel the update falls short of expectations, particularly compared to competing Chinese automakers’ capabilities.

The over-the-air update introduces enhanced Navigate on Autopilot (NOA) functionality, allowing vehicles to exit ramps and intersections based on navigation routes, recognize traffic signals, and execute turns. 

Additionally, the system can change lanes automatically in response to speed and route conditions. A key enhancement includes activating Tesla’s in-cabin camera, which monitors driver attentiveness and issues alerts if focus on the road is lost. Tesla emphasizes that camera data are processed locally within the vehicle and remain inaccessible to external parties.

Frustration among early adopters

Despite the new features, Tesla’s offering remains restricted compared to the full FSD capabilities available in North America. It is available only for Model 3 and Model Y units manufactured after February 2024, as well as the latest Model S and Model X variants.

Tesla also renamed its package in China, now called “FSD Intelligent Assisted Driving,” which will likely align with regulatory expectations and downplay the system’s self-driving claims.

Chinese Tesla owners have expressed frustration over the update’s limitations. Many early adopters who purchased the FSD package years ago, costing 56,000 yuan (€6,990), expected more advanced autonomous functionality. Tesla’s FSD update remains an incremental step rather than a game-changer.