European Sales Decline
According to the European Automobile Manufacturers' Association (ACEA), Tesla EV registrations—a common proxy for sales—fell 23% year-over-year in August, dropping to 14,831 units from 19,136 in the same month of 2024.
The weakness isn't just a one-off. For the first eight months of 2025, Tesla's European registrations are down 32.6%, underscoring a sustained slump.
That decline stands in sharp contrast to the broader market. Total EV registrations in Europe rose 26% over the same period, while petrol and diesel vehicle registrations fell more than 20%. In other words, the EV pie is growing, but Tesla's slice is shrinking.
Analysts Still See Delivery Strength
Despite the European weakness, some analysts remain upbeat about Tesla's global performance. RBC Capital Markets said in a note Thursday that they expect Tesla's third-quarter deliveries to reach 456,000 vehicles. That would top both the FactSet consensus of 448,000 and the Visible Alpha consensus of 440,000.
RBC pointed to a likely U.S. demand bump as consumers rush to take advantage of the $7,500 federal EV tax credit, which expires at the end of September.
Stock Performance in 2025
Even with Thursday's selloff, Tesla stock has staged a modest recovery this year. Shares are up about 5% in 2025, clawing back some ground after a bruising first quarter when the stock plunged 36%.
Still, the volatility reflects the tension between Tesla's long-term growth story and near-term challenges, from competitive pressures to reputational risks tied to CEO Elon Musk.
Musk's Political Activism and Brand Impact
Musk's outspoken political activism has increasingly weighed on Tesla's brand image. Earlier this year, he endorsed Germany's far-right AfD party. More recently, he appeared by video at an anti-immigrant rally in the U.K. that turned violent, led by activist Tommy Robinson, a convicted fraudster.
British Prime Minister Keir Starmer publicly rebuked Musk for his "dangerous" comments at the rally, where 26 police officers were injured. Musk told attendees, "violence is coming to you" and "you either fight back or you die."
Such controversies have dampened Tesla’s appeal among some prospective EV buyers, particularly in Europe, where brand perception plays a significant role in consumer choice.
Looking Ahead: Affordable Model in the Works
To reinvigorate demand, Tesla has confirmed that an affordable new model is in development. The lower-cost EV could help Tesla fend off intensifying competition from rivals like Volkswagen, BYD, and other automakers that have been steadily gaining market share in Europe and beyond.
If successful, the new model could restore momentum in regions where Tesla has lost ground, while also broadening its customer base in the U.S. and Asia.
The Bottom Line
Tesla's European slump highlights the challenges of maintaining dominance in a rapidly expanding EV market. While global deliveries may still beat expectations this quarter, the company faces mounting pressure from both competitors and Musk's own political controversies.
For investors, the key question is whether Tesla's upcoming affordable model can reset the narrative—or whether rivals will continue to chip away at its once-commanding lead.