Tesla Faces 43% Sales Drop in Europe Despite Growing EV Market

Tesla’s struggles in Europe have intensified, with the company reporting a staggering 43% drop in sales during the first two months of 2025 compared to an already disappointing 2024.

This downturn occurs despite the electric vehicle market experiencing a robust 31% growth across the continent, highlighting deeper issues within Tesla’s brand positioning.

March brought a glimmer of hope as Tesla began delivering the updated Model Y, which many had anticipated would revive interest in the company’s offerings.

Sales Incentives in China Highlight Tesla’s Brand Challenges Globally

However, the anticipated rollout of the new rear-wheel-drive (RWD) version has not yet transpired, leaving many potential buyers unfulfilled. The absence of the RWD variant could significantly impact sales figures, with analysts keenly observing how these deliveries will unfold in the near term.

Adding to its woes, Tesla has resorted to implementing sales incentives in China for the Model Y, where all versions are available and competition is fierce. This move suggests that the brand’s image could be suffering, particularly in Europe, where the transition to the updated Model Y coincides with ongoing customer hesitance.

While shareholders may downplay the ramifications of the brand damage, it is difficult to disentangle these issues from the logistics surrounding the Model Y changeover.

The first quarter is expected to reveal a decline of nearly 40% in Tesla’s sales compared to 2024, a trend that may continue into the second quarter. Some speculate that more than half of this sales drop could be attributed to brand-related issues, with the remainder stemming from the Model Y transition.

Looking ahead, analysts await Q2 and Q3 data for a clearer picture of Tesla’s European strategy and sales resilience. However, the timeline for full RWD deliveries may delay a comprehensive understanding of the brand’s recovery trajectory in a rapidly evolving EV landscape.