Tesla’s Deliveries Continue to Plunge in Europe As Slowdown Deepens

Following a difficult 2025, which saw Tesla’s European sales drop from 326,000 units in 2024 to approximately 235,000, the start of the new year suggests that the once undisputed electric vehicle (EV) king is still fighting to find its footing against a surge of Chinese competition and shifting consumer sentiment.

While official European Automobile Manufacturers’ Association (ACEA) consolidated figures for January are typically released mid-month, early registration data from key markets indicates a continued downward trend.

Tesla’s Europe Sales Plunge

After ending 2025 with a market share of roughly 1.4% to 1.7% (down from 2.4% in 2023), early January reports show Tesla failing to reach the top 5 for Battery Electric Vehicle (BEV) sales in major hubs.

Looking at some individual countries, Tesla’s registrations in France fell 42% to 661 units, while Norway registrations fell 88% to a mere 83 units. While Sweden and Denmark saw a yearly rise in registrations, they were not able to make up for the decline in other major markets.

It is important to note that Tesla deliveries often follow a “wave” pattern, with higher numbers at the end of a quarter. However, the year-over-year comparison for January shows a decline that some analysts estimate could be as high as 50% in specific regions compared to the same period in 2025.

Tesla’s Aging Product Portfolio Is Taking a Toll on Sales

Several factors are weighing on Tesla’s ability to dominate the European continent as it once did. A study by consulting firm Escalent recently highlighted that 38% of European respondents feel Tesla’s “freshness” has worn off. With the Model S and Model X officially ending production in Summer 2026 and no immediate replacements announced, the brand is relying heavily on the aging (though recently refreshed) Model 3 and Model Y.

In markets like Sweden and Germany, Tesla continues to face friction. Ongoing labor disputes in Scandinavia and public pushback against CEO Elon Musk’s increasingly vocal political stances have led to organized protests and “brand avoidance” among some European buyer segments.

Chinese Automakers Are Taking Market Share in Europe

Moreover, Chinese manufacturers are no longer just “coming,” they have arrived.

BYD saw a staggering 268% jump in European sales throughout 2025, and January 2026 data shows brands like NIO (delivering over 27,000 units globally in Jan) and XPeng making significant inroads with premium models.

The XPeng P7+ made its high-profile European debut at the Brussels Motor Show in January 2026, targeting the exact demographic that typically buys the Model 3.

BYD Has Become The Biggest EV Seller Globally

BYD has become the world’s biggest seller of battery electric vehicles (BEVs) as it sold 2.26 million cars last year, a year-over-year rise of 27.9%.

Notably, BYD surpassed Tesla’s total sales in 2022, even as the US EV giant retained the title of the biggest seller of BEVs. It hit yet another milestone when its 2024 revenues surpassed those of Tesla. BYD’s annual revenues rose 29% YoY to $107 billion last year, while Tesla’s revenues were around $97.7 billion. The steep rise in BYD’s sales was led by a record 4.27 million deliveries, which was well ahead of Tesla, which reported a YoY fall in its 2024 deliveries – the first in the company’s history

In 2011, Musk laughed at the possibility of BYD becoming a competitor to Tesla. However, the Chinese company has proven critics wrong, and after becoming the biggest NEV seller in China, it is now expanding into international markets.

Expiration of the US EV Tax Credit Has Taken a Toll on Tesla’s Sales

Notably, last year, Tesla faced a significant headwind when the $7,500 federal EV tax credit expired at the end of September 2025. This caused a massive surge of buyers in Q3 but left a vacuum in Q4. BYD, conversely, benefited from ongoing domestic incentives in China and aggressive expansion in Southeast Asia and South America.

While Tesla’s lineup remained largely stagnant, with consumers waiting for the “Cybercab”, BYD launched several high-volume models under its Ocean and Dynasty series. The high-end Yangwang brand also provided BYD with a foothold in the luxury segment, where margins are significantly higher.

TSLA’s Sales Fell Last Year

Tesla delivered 418,227 vehicles in Q4 2025, a 16% drop compared to the same period in 2024. This figure was well short of the consensus estimate of 440,907 and also came in below the company’s own curated analyst consensus of 422,850 vehicles, which Tesla had unusually published on its website just days before the actual release to “anchor” investor expectations.

The decline was largely attributed to a cooling in demand following the expiration of the $7,500 federal EV tax credit in the United States on September 30, which had caused a massive “pull-forward” of sales into the third quarter.

For the full year of 2025, Tesla delivered a total of 1.64 million vehicles, representing roughly an 8.5% decline from the 1.79 million units delivered in 2024. This downward trend highlights a period of significant transition and external pressure for the automaker. Throughout the year, Tesla faced intensifying competition from Chinese rivals like BYD and Xiaomi, as well as brand backlash in Western markets linked to CEO Elon Musk’s political engagement. To defend its market share, Tesla launched cheaper, stripped-down versions of the Model 3 and Model Y in the fourth quarter, though these moves were not enough to offset the loss of federal incentives and a softening global EV market.

TSLA Is Pivoting to AI

Tesla is meanwhile pivoting to artificial intelligence (AI), and Musk characterized the current time as a “critical inflection point” for the company, stressing that Tesla is the “leader in real-world AI” and that the combination of FSD and Robotaxi will fundamentally change the nature of transport.

Tesla’s Cybercab Could Help Lift Deliveries

At Tesla’s annual meeting last year, the company unveiled Cybercab, the fully autonomous robotaxi designed without a steering wheel, pedals, or side mirrors. Musk confirmed that mass production is scheduled to begin in April 2026 at Gigafactory Texas, with the staggering goal of achieving a 10-second cycle time per vehicle on the production line, six times faster than the Model Y. This manufacturing efficiency is intended to allow for an annual production capacity of up to 2-3 million units, which is central to Tesla’s objective of deploying 1 million robotaxis in commercial service as part of Musk’s long-term compensation milestones.

Musk Believes TSLA Can Become the Biggest Company

While previously Musk said that Tesla would be more than the combined worth of Apple and Saudi Aramco, he has since been making even bolder predictions, and predicted that the company’s Optimus humanoid would make it a $25 trillion company. However, many Wall Street analysts don’t share Musk’s optimism and see the stock as highly overvalued.