April 2025 was one of Tesla’s worst months in Europe in recent years — the company’s sales collapsed by 49% compared to the same period last year.
At the same time, the overall electric vehicle market in the region, by contrast, is showing steady growth: in the first four months of 2025, sales of new electric vehicles increased by 26.4% (to 558,262 units), and in April alone, the increase was 34.1%. The share of electric vehicles in the EU has reached 15.3%, but Tesla seems to be staying away from this boom.
Tesla CEO Elon Musk continues to be one of the most controversial figures in the business. His political statements and harsh rhetoric on social media alienate some European consumers, for whom ESG principles and corporate social responsibility play an important role.
Unlike in the United States, where Musk retains a loyal audience, his image works against the brand’s European presence. Tesla is no longer perceived as a green startup, but is associated with Musk’s politicized business, which reduces its attractiveness to environmentally oriented buyers.
Another key reason for the drop in demand for Tesla is the rapid growth of hybrid cars, especially from China. In Europe, their share has already reached 35%, and Chinese manufacturers are actively increasing their presence, taking advantage of the absence of increased duties on hybrids unlike electric vehicles.
Tesla does not offer hybrids, relying solely on all-electric models. With European consumers increasingly choosing plug-in hybrids (PHEVs) due to their versatility and freedom from charging concerns, Tesla is losing customers.
Trade wars compound Tesla’s problems. The company contacted Trump’s administration with a warning about the risks of imposing duties on imported chips. Tesla fears supply disruptions and cost increases, which could hit its profits.
TSMC, one of the key suppliers of chips for Tesla, has sent a letter to the US authorities warning that the new tariffs could derail plans to build factories in Arizona worth $165 billion. Tesla, in turn, recognizes that without international partners in North America, Europe, Africa, and Asia, it cannot effectively develop high-tech production. The letter notes that restricting the import of chips not produced in the United States in sufficient volume will create problems at a crucial moment in the global race for artificial intelligence.
The threat of new tariffs already affects the market: ES Futures show increased volatility, and automatic trading reinforces negative trends. If restrictions are imposed, Tesla may face a new round of price pressure, further reducing its competitiveness in Europe and causing a further Tesla stock price decline.
A 49% drop in sales is an alarming signal. The European market remains key for electric vehicles, but Tesla is losing ground due to Musk’s political image and rising competition with Chinese hybrids. The risks associated with trade wars also add pressure.
The company seeks to adjust its marketing campaign, strengthen dealer networks, and possibly consider launching a European hybrid model. Otherwise, its market share will continue to decline, giving way to Chinese brands and traditional auto giants that are actively increasing the production of electric vehicles.
While Tesla is looking for an answer to these challenges, investors are closely watching its next steps — they will determine whether the company can regain lost ground.