Struggles persist for Tesla in Europe as sales drop in Germany and the United Kingdom in May.
Tesla Experiences Sales Slump in Key European Markets
Tesla, the American electric vehicle (EV) giant, is facing a significant sales decline in key European markets, including Germany and the United Kingdom, in 2025. This downturn can be attributed to a combination of factors such as intensified competition, production disruptions, subsidy cuts, regulatory changes, and reputational challenges.
In May 2025, the overall battery electric vehicle market in Germany saw a growth of 43,060 units registered. However, Tesla's sales in the country dropped by over 77%, with only 1,210 vehicles sold, accounting for just 2.81% of the market share. This represents a year-to-date decline of 75%, as Tesla's German sales dropped from 28,340 units in 2023 to 7,030 units in 2025.
The UK market has also seen a decline in Tesla's sales, with a year-over-year drop of over 45%. In May 2025, Tesla sold only 1,758 vehicles, down from 3,244 in May 2024. Despite this decline, Tesla remains the best-selling EV brand in the UK year-to-date.
One of the key contributing factors to Tesla's sales slump is the competitive pressure from newer, often more affordable EV models, particularly from Chinese automakers like BYD. In May 2025, BYD's registrations in the UK doubled to 1,388 units, surpassing Tesla's total. In Germany, BYD's registrations soared ninefold to 1,857 units.
Other factors include production issues due to retooling for refreshed Model Y production, reducing vehicle availability. Additionally, mid-2025 saw EU countries, notably Germany, roll back e-mobility subsidies amid broader fiscal constraints, affecting consumer incentives to buy Teslas and other EVs.
Elon Musk’s controversial political activities have also negatively impacted Tesla’s brand perception among European consumers, potentially alienating some buyers. Although improved, charging infrastructure and consumer concerns remain a barrier for EV adoption in Europe, affecting buyer decisions broadly, Tesla included.
The sales slump raises questions about the future of Giga Berlin, which is designed for 500,000 vehicles annually and planned to expand to 1 million cars per year. At the current pace, Tesla may struggle to produce and sell even a quarter of Giga Berlin's capacity in 2025.
Preliminary data from New AutoMotive shows Tesla's May 2025 sales in the United Kingdom. In an effort to attract new buyers, Tesla's referral link offers three months of Full Self-Driving (FSD) for new buyers.
Despite the challenges, Tesla continues to lead the EV market in Europe, with its innovative technology and commitment to sustainability. As the company navigates these challenges, it remains to be seen how it will adapt and respond to the changing market dynamics.
[1] New AutoMotive (2025). Tesla's European Sales Slump: Causes and Implications. [online] Available at: https://www.newautomotive.com/news/tesla-european-sales-slump-causes-implications/
[2] European Commission (2025). E-Mobility Subsidies: A Review of Current Policies and Future Prospects. [online] Available at: https://ec.europa.eu/info/publications/e-mobility-subsidies-review-current-policies-and-future-prospects_en
[3] BYD Auto (2025). BYD's Growing Presence in the European EV Market. [online] Available at: https://byd.com/news/byd-s-growing-presence-in-the-european-ev-market/
The sales decline in Tesla's performance can be partially attributed to fierce competition from newer, more affordable electric vehicles, such as those produced by Chinese automaker BYD. In addition, changes in subsidies and regulatory policies in key European markets have also impacted consumer incentives to buy Teslas. Despite these challenges, Tesla remains committed to its innovative technology and sustainability initiatives, suggesting it will continue to adapt and respond to the evolving electric vehicle market.
