Tesla Inc. is experiencing a significant decline in its European sales, with registrations in Germany falling by 76% in February, according to the German Federal Motor Transport Authority. The sharp drop coincides with a broader slowdown in Tesla's European performance, as the company faces production disruptions, increasing competition, and backlash tied to CEO Elon Musk's political endorsements.
Tesla's German sales, once a stronghold for the electric vehicle manufacturer, declined to just 1,429 vehicles last month, a stark contrast to the 6,000 units sold in February 2024. The downturn follows a broader trend in the European market, where Tesla's sales are down 71% in Germany and 44% in France for the first two months of 2025.
Musk's public support for the far-right Alternative for Germany (AfD) party has fueled controversy in the country, with critics accusing the CEO of aligning with an anti-immigrant, pro-Russian movement that has disrupted the country's political landscape. While the AfD gained ground in Germany's February 23 election, the incoming government led by Friedrich Merz has distanced itself from the party.
Tesla shares pared gains in premarket trading following the release of the German sales data, with the stock up 1.2% as of early Wednesday morning in New York. The company's stock has already fallen 33% this year as it grapples with market pressures and shifting consumer demand.
Beyond political factors, Tesla's decline in Germany and other European markets is driven by operational and competitive challenges. The company is undergoing a major overhaul of production lines for its best-selling Model Y, leading to temporary shutdowns at multiple facilities, including its plant in Grünheide, outside Berlin. The retooling process has slowed deliveries and disrupted supply chains, compounding the decline in sales.
Tesla also faces intensifying competition from both European automakers and Chinese rivals such as BYD Co., which has outsold Tesla in multiple European markets this year. The narrowing lineup of Tesla vehicles, coupled with the increasing variety of alternatives in the EV segment, has further pressured the company's market share.
Attacks on railway infrastructure near Tesla's German factory last month have added to the turmoil. A group of activists claimed responsibility for setting fire to equipment, stating their intention to prevent the expansion of Tesla's operations in the country. The disruptions have caused additional logistical challenges for the automaker at a time when it is already struggling with declining consumer demand.
Tesla's sales slump extends beyond Germany, with sharp declines reported across several key European markets. In France, the company's sales are down 44% year-to-date, while Model 3 deliveries have fallen 60%. The Netherlands and Portugal have also reported declining figures, with Portugal seeing only 547 deliveries in February.
The UK remains the only European market where Tesla has managed to post gains in early 2025. After an 18% drop in January, Tesla's UK registrations rebounded in February, bringing year-to-date growth to 7%. However, this recovery has done little to offset the broader downturn in the region.
While some Tesla supporters argue that the Model Y production changeover is the primary reason behind the decline, data suggests a more complex picture. In Germany, Model 3 sales are down 40% despite a similar transition occurring last year, indicating that factors beyond production shifts are contributing to the downturn.
