Tesla continued to lose ground in the European market in May 2025. According to the European Automobile Manufacturers Association (ACEA), the brand's sales in the European Union, the United Kingdom and the European Free Trade Association countries fell by 27.9% compared to May last year, reaching just 13,863 cars. This is the fifth consecutive month that Tesla has recorded a decline in sales in Europe. The company's market share also fell to 1.2% compared to 1.8% last year, CNBC reports.
Tesla shares reacted to the news by falling by almost 5%. In total, the company's share price has fallen by more than 18% since the beginning of the year. This decline is explained by a number of factors, including the political activities of Tesla CEO Elon Musk, which have caused controversy and even protests outside the company's car dealerships in Europe.
Competition in the electric car market is growing, and Tesla is losing ground to pressure from Chinese manufacturers. For example, BYD sold almost as many cars as Tesla in May, after overtaking Musk’s company for the first time in April. Cheaper Chinese electric cars are becoming increasingly popular among European buyers, stimulating overall market expansion even as EU tariffs increase.
Overall, Chinese manufacturers sold 65,808 cars in Europe in May, more than double the number a year earlier, taking their market share to 5.9%. Even after the EU imposed tariffs, Chinese brands are growing their presence by expanding their model range, including hybrids and plug-in hybrids, analysts said.
In response to the challenges, Tesla has updated the Model Y, hoping that this will help revive sales. In Norway, for example, the model has already caused a noticeable revival in the market. But overall, the brand is facing increasing pressure from both traditional automakers and ambitious Chinese competitors, which is affecting its prospects in Europe.