Tesla's misery in Europe has deepened, with new figures revealing a 40% sales drop in July 2025 from the same month last year. This happened a few months after used Tesla listings hit a record high.
According to the European Automobile Manufacturers Association (ACEA), Tesla registered just 8,837 cars throughout Europe, including the EU, the United Kingdom, Norway, Switzerland, Iceland, and Liechtenstein.
This decline comes as Tesla experiences its seventh straight month of declining sales in the region. In contrast to Tesla, the larger EV market is thriving. Chinese rival BYD had 13,503 vehicles registered in July, a mind-boggling 225% year-over-year growth.
Global Challenges for Tesla
Tesla's woes aren't confined to Europe. In the U.S., sales have also slowed in 2025, with the temporary lift from the soon-to-be-expired federal EV tax credit providing only a temporary buffer. Once the credit ends officially after Sept. 30, Tesla and other electric vehicle manufacturers will likely have to endure more pressure as prices increase for buyers.
Read more: Tesla Robotaxi to Reportedly Expand Early Testing in San Francisco Following Recent Austin Launch
Political Controversies Add to Sales Woes
A lot of Tesla's decline has been concurrent with Elon Musk's contentious involvement in politics. The business tycoon is hurting the brand. His membership in Donald Trump's Department of Government Efficiency (DOGE) and his public endorsement of Germany's far-right Alternative for Germany (AfD) party have provoked outrage.
The effects were instantaneous: within one month of Musk's backing of the AfD, Tesla's German sales plummeted to less than 900 units, almost a 50% decline.
Strategic Shifts and Market Uncertainty
In the face of sluggish demand, Tesla has capped European buyers' ability to order some models, such as the Model S and Model X. In the United States, meanwhile, a swelling tide of pre-owned Tesla automobiles flooded into the market, making new car sales even more difficult.
Mashable notes that another contributing factor to Tesla's struggles is the loss of key revenue streams. Musk announced in May that he was stepping down from his role in the Trump administration, but Tesla still faces long-term financial headwinds.
The expiration of carbon credits under the president's "Big Beautiful Bill" removes a revenue source that generated more than $11.8 billion for Tesla over the past decade.
Tesla is Facing One of the Toughest Challenges
With its European market dwindling, political scandals overshadowing its brand image, and financial subsidies such as carbon credits and tax breaks drying up, Tesla is having one of its toughest times in years. Meanwhile, BYD and other competitors are taking advantage of this moment.
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