Tesla’s TSLA car sales dropped significantly in several European countries in May, which marks the fifth straight month of declines. This downturn has been attributed to CEO Elon Musk’s political controversies and an aging vehicle lineup.
Sweden and Portugal saw some of the steepest declines, where Tesla’s new car sales fell 53.7% and 68% year over year, respectively. However, overall EV sales in those countries increased by about 25%. Tesla sales also fell 30.5% in Denmark, 36% in the Netherlands, 19% in Spain and 67% in France, according to recent data.
However, Norway stood out as an exception where Tesla sales soared 213% in May, thanks to the introduction of updated Model Y SUVs. Sales of both new and previous versions of the Model Y surged to 2,346 units from 690 in May 2024.
Although the new Model Y is already available for order in many European markets, deliveries of the most affordable variant, historically Tesla’s top seller, are only expected to begin this month in countries like Germany, the United Kingdom, France and Italy. As a result, the number of orders in May has yet to show up in sales data.
To stimulate demand, TSLA has been offering various financial incentives in Sweden, Germany, Britain and France. It is also offering interest-free loans for the new Model Y in Norway. Tesla has been facing tough competition from local and Chinese auto makers in Europe. TSLA carries a Zacks Rank #5 (Strong Sell) at present.
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In Europe, total sales of BYD Company Limited BYDDY, a Chinese EV maker, surged 359% year over year in April. BYD surpassed Teslain EV sales in Europe for the first time in April, overtaking the long-time market leader in the region. Per Jato Dynamics, BYD registered 7,231 new battery-electric vehicles in April, up 169% from the same time last year, earning it a spot among the top 10 EV brands in Europe. Tesla registered a drop of 49%, placing it one spot back.
In April, Volkswagen AG VWAGY, a German auto manufacturer, gained 1.1% market share in Europe. It led the European EV market in April 2025. Volkswagen’s subsidiaries, Skoda and Audi, also saw notable growth in the battery electric vehicle segment. The Skoda Elroq emerged as the top-selling all-electric model in Europe in April, validating the brand’s strategy to introduce the SUV-sized Elroq in the niche between the B and C segments. The Elroq was followed by Volkswagen’s ID3, ID7 and ID4 models.
Tesla has underperformed the Zacks Automotive – Domestic industry and the Auto, Tires and Truck sector year to date. Tesla has lost 15.1% compared with the industry and sector’s decline of 14.2% and 9.6%, respectively.