Tesla's European Woes Worsen with 13th Month of Sales Decline
Tesla's challenges in the European market have intensified, with new car registrations plummeting to 8,074 units in January, a sharp 17% decrease compared to the same period last year, according to data from the European Automobile Manufacturers Association (ACEA). This marks the 13th consecutive month of declining sales for Elon Musk's company, highlighting a persistent downturn.
Market Share Erosion and Competitive Pressures
Tesla's market share across the European Union, Britain, Switzerland, Norway, and Iceland has dwindled to 0.8%, down from 1% a year earlier. Rico Leman, senior sector economist at ING, described the start of 2026 as 'very weak' for Tesla, noting that the company's image deteriorated in Europe last year. Consumers now have more affordable electric vehicle (EV) options from rivals such as BYD, MG, and ZEEKR, intensifying competition.
The report also indicates that Tesla's focus on autonomous driving technology, rather than expanding its mass-market vehicle lineup, has left it vulnerable. Additionally, a flood of used Teslas from earlier lease cycles has driven down second-hand prices, creating further pressure on new sales.
Political and Reputational Setbacks
Elon Musk's Tesla has faced reputational setbacks in Europe due to his political ties. His financial support for US President Donald Trump's re-election campaign and subsequent involvement in federal agency cuts sparked protests at Tesla dealerships across Europe. Although Musk later clashed publicly with Trump, analysts suggest that the damage to Tesla's brand image continues to linger, affecting consumer perception.
BYD's Rapid Ascent in the European Market
Meanwhile, Chinese EV giant BYD has continued its rapid ascent in Europe. Registrations surged by 165% year-on-year to 18,242 units in January, more than doubling its market share to 1.9% from 0.7% a year earlier. While tariffs have largely kept BYD out of the U.S. market, its cost advantage in Europe remains formidable.
Michael Field, a Morningstar strategist, explained that Chinese automakers benefit from structurally lower labor costs, a gap that is unlikely to close even in the next five years, giving them a competitive edge in pricing and market penetration.
Overall European Car Sales Trends
Overall, car sales across the EU, Britain, and EFTA countries fell by 3.5% to 961,382 units in January. Key trends include:
- Petrol car registrations dropped by 26%.
- Battery-electric vehicle registrations rose by 14%.
- Plug-in hybrid vehicle registrations increased by 32%.
- Hybrid-electric vehicle registrations grew by 6%.
This shift underscores the growing adoption of electric and hybrid vehicles, even as the overall market experiences a slight contraction.
