Chinese companies dethrone Tesla from Europe

Electric vehicles (EVs) and hybrids are rapidly gaining popularity in Europe. According to the European Automobile Manufacturers Association (ACEA), the share of fully electric vehicles rose to 15.4 % in the first five months of 2025, compared to 12.1 % in the same period last year. Even more impressive is the increase in the share of hybrids, which captured a whopping 35.1 % of the market.

On the other hand, traditional petrol and diesel engines are experiencing a significant decline. Petrol vehicles fell from 35.6 % to 28.6 %, while diesels fell to just 9.5 % in May.

Tesla's alarming decline

Tesla is losing ground in this rapid shift to electric vehicles. Its market share in the EU fell from 1.6 % to just 0.9 % in May. Tesla vehicle registrations in the wider European region (including Switzerland and the UK) fell by 37.1 % year-on-year. In the first five months of 2025, Tesla saw a 45.2% drop in vehicle registrations in Europe.

One of the reasons for Tesla's decline is also the controversial political statements of Elon Musk, who supported the German far-right AfD party and collaborated with the Trump administration. These moves have triggered protests and vandalism at Tesla dealerships across Europe, causing serious damage to the brand, further discouraging European buyers.

Chinese rivals on the march

Chinese auto giant BYD overtook Tesla in European sales for the first time in April, signaling a changing market dynamic. BYD, which is backed by the Chinese state, sold 7,230 electric vehicles in Europe in April, compared to Tesla's 7,165. In the UK, where Chinese vehicles are not subject to import tariffs, BYD's sales in May were up more than 400% year-on-year, while Tesla's sales fell 36%.

The need for innovation and competitiveness

Experts warn that without new models and competitive pricing, Tesla risks being overtaken not only by established European manufacturers such as Volkswagen and Renault, but also by nimble Chinese newcomers. Tesla launched its robo-taxi project in Austin in June, but it remains limited to a small test group. While the launch temporarily boosted Tesla shares, analysts warn that it will be a long time before robo-taxi services have a significant impact on Tesla's revenue.

According to ACEA, the share of electric vehicles in Germany, Belgium and the Netherlands was double-digit higher in May than a year earlier. In France, however, electric vehicle sales fell by 7.1% y-o-y, while hybrid sales increased by 38.3% y-o-y.