Tesla, once the unchallenged leader in the electric vehicle market, is experiencing significant headwinds as sales decline and competitors gain ground. In January 2025, Tesla’s European sales plummeted by 45% compared to the same month in 2024, with only 9,913 units sold, down from 18,121. Germany, a pivotal market for Tesla, witnessed a staggering 76% decrease in sales, with only 1,429 vehicles sold in February 2025.
This downturn is not confined to Europe. In the United Kingdom, Chinese automaker BYD surpassed Tesla in new vehicle registrations for the first time. BYD registered 1,614 vehicles in January 2025, marking a 551% increase from the previous year, while Tesla’s registrations dropped to 1,458 from 1,581. BYD’s ascendancy is further highlighted by its global performance; in January, it sold nearly double the number of EVs compared to Tesla, with Tesla’s sales declining by 11% year-over-year.
The Chinese market, a critical arena for EV manufacturers, also reflects Tesla’s challenges. BYD reported wholesale sales of over 318,000 units in January 2025, a 161% year-on-year increase, while Tesla’s sales in China decreased by 11.5% during the same period. This shift underscores the intensifying competition Tesla faces from Chinese manufacturers, who are rapidly expanding their market share both domestically and internationally.
Several factors contribute to Tesla’s current predicament. CEO Elon Musk’s public political stances have alienated segments of the consumer base. A Morgan Stanley survey revealed that 85% of respondents believe Musk’s controversial political views are negatively impacting Tesla’s business. In Spain, some Tesla owners have expressed regret over their purchases due to Musk’s support for extremist movements and far-right political figures. Incidents of vandalism against Tesla vehicles have been reported in Germany and France, reflecting growing public dissent.
Financially, Tesla’s stock has mirrored its sales downturn. The company’s shares experienced a 15.4% drop, marking the most significant decline in five years and bringing the stock down 54.5% from its December 2024 high. This decline has positioned Tesla as the worst performer among S&P 500 stocks in 2025. Investors are concerned about missed delivery growth predictions, declining sales, and doubts about profitability and future forecasts. The erosion of profit margins, partly due to price reductions aimed at boosting sales, has further fueled investor unease.
Tesla’s product strategy has also come under scrutiny. Critics point to an aging vehicle lineup and the lack of affordable electric models as significant shortcomings. While competitors have introduced more cost-effective and technologically advanced EVs, Tesla’s focus on ambitious projects like robotaxis has not yielded the anticipated results. This gap between consumer expectations and Tesla’s offerings has led to a decline in brand loyalty and sales.
