Tesla’s European Market Share Declines Amidst Increased Competition
Electric vehicle manufacturer Tesla experienced a further contraction in its market share across Europe in February, according to new data. Despite an overall surge in EV registrations on the continent, sales for the company witnessed a decrease for the second consecutive month. This downturn comes as Tesla faces mounting competition in the European automotive market.
Sales Slump and Growing Competition
Prior to the anticipated launch of its Model Y mid-size SUV, the electric vehicle brand led by Elon Musk has seen a significant drop in European sales. Data from the European Automobile Manufacturers Association (ACEA) reveals a 42.6% reduction in Tesla car sales in Europe year-to-date.
In February, Tesla captured 1.8% of the total European car market and 10.3% of the battery-electric vehicle (BEV) sector. This represents a decrease from the previous year, where the company held 2.8% and 21.6% of the respective markets.
The figures indicate that Tesla sold fewer than 17,000 vehicles in the European Union, the United Kingdom, and European Free Trade Association countries. This is a considerable decrease compared to over 28,000 units sold in the same period in 2024.
Factors Contributing to Tesla’s Challenges
Several factors are currently impacting Tesla’s performance in the European market:
- Limited Model Range: Tesla’s vehicle lineup is perceived as smaller and older compared to its rivals.
- Increased Competition: Traditional automakers and emerging Chinese brands are actively introducing new and often more affordable electric models, intensifying competition.
- Controversies Surrounding CEO: Elon Musk, Tesla’s Chief Executive Officer, has faced criticism for engaging with far-right political groups in Europe, potentially affecting the brand’s appeal to some consumers.
Overall Growth in European BEV Market
Despite Tesla’s sales decline, the broader European market for battery-electric vehicles (BEVs) demonstrates robust growth. Across the same European markets, BEV sales increased by 26.1% compared to February 2024. This growth occurred even as total car sales experienced a 3.1% contraction, according to ACEA data.
Tesla’s Carbon Credit Pooling and EU Emissions Targets
Recent EU filings revealed that Tesla has established a carbon credit pool, selling credits to over half a dozen automakers. This arrangement assists other manufacturers in meeting the European CO2 emission targets that took effect in January.
Analysts suggest that based on 2024 sales volumes, Tesla’s sales of carbon credits could potentially offset the emissions of these participating companies. However, this situation is subject to change if Tesla’s sales continue on a downward trajectory.
The European Union implemented these emissions targets to encourage the adoption of electric vehicles. The EU is expected to approve a relaxation of these regulations, allowing for a three-year averaging of fleet emissions.
Electrified Vehicle Market Trends
While overall new car registrations in the EU decreased by 3.4% in February, battery-electric vehicle (BEV) sales surged by 23.7%, marking the second consecutive month of growth. Hybrid electric vehicle (HEV) sales also showed strong performance, increasing by 19%.
Electrified vehicles, encompassing BEVs, HEVs, and plug-in hybrid electric vehicles (PHEVs), accounted for 58.4% of all new passenger car registrations in the EU during February. This represents a significant rise from 48.2% recorded in the same month last year.
Industry Expert Insights
Chris Heron, Secretary General of E-Mobility Europe, commented on the market trends, stating that “2025 has started really brightly for Europe’s electric car market.”
He added, “We are witnessing the initial impacts of manufacturer strategies to comply with the EU’s scheduled CO2 limits.”
Performance of Major Automotive Brands
Among prominent brands in Europe, Volkswagen and Renault experienced sales growth of 4% and 10.8% respectively in the EU, the UK, and European Free Trade Association countries during February. In contrast, Stellantis witnessed a sales decrease of 16.2%.
SAIC Motor’s sales increased by 26.1%, despite the impact of EU tariffs on electric vehicles manufactured in China. However, Volvo, owned by Geely, experienced a 15% sales decline.
The market share of brands not individually tracked by ACEA, which includes BYD and other Chinese automotive manufacturers, expanded to 2.5%, up from 1.5% the previous year.
Country-Specific Sales Performance
Spain demonstrated positive growth in car sales, with an 11% year-on-year increase in February. Conversely, other major European markets experienced declines. Car registrations fell by 6.4% in Germany, 6.2% in Italy, and 0.7% in France.