- Tesla emerged empty-handed after Europe’s new car market for EVs surged by 37% in January. Its sales plummeted 45% across the EU, Norway, Switzerland, and the U.K., leading to its share shriveling to 6% from 15% just 12 months earlier.
Every Tesla investor likely knows by now Elon Musk’s car brand is underwater in Europe. The question has really only been how quickly it is sinking.
Now, fresh industry data sourced from the European Union, as well as non-EU countries like the U.K., Norway, and Switzerland, reveal the true scale of last month’s sales collapse across Europe.
Registrations of new Tesla vehicles—which track retail sales with a slight lag—plummeted by 45% year over year in January to 9,945 vehicles, according to figures from auto industry association ACEA published on Tuesday.
The stark drop in countries like Germany, where Musk faced pushback for his decision to campaign for the far right in Sunday’s elections, had been known. But previous data had captured only individual markets. ACEA aggregates all of them, even from the island of Malta, and therefore serves as the most authoritative monthly indicator for total European car demand.
Dwindling share of Europe’s EV market
By comparison, the continent’s overall EV market—the world’s second-largest after China—soared by 37% year over year to roughly 166,000 vehicles during January.
“After a stable 2024 without significant growth, this is the first sign of recovery,” wrote Peter Badík, cofounder and managing partner of European EV-charging infrastructure provider Greenway.
The two opposite trends mean that Tesla’s share dwindled to just 6% from 15% over the course of only 12 months.
This stark drop isn’t entirely the result of Musk’s declining popularity over his political stands, nor even the imminent changeover to the refreshed Model Y that begins to roll out in March. There is also increased competition in the market: Many carmakers are offering sales incentives on their EVs to meet stringent new 2025 targets for CO2 fleet emissions set both by the EU Commission as well as a fully-fledged EV mandate in the U.K.
Their traditional business must therefore be scaled back for regulatory reasons. Whereas nearly every second vehicle sold in the European Union was powered solely by a combustion engine in January 2024, that share is now 39.4%, a drop of 9.2 percentage points.
Along with EVs, much of the replacement demand is coming in the form of mild electric hybrids, an inexpensive fuel-saving technology.
Emission targets raise the pressure on Tesla from incumbents
On the one hand, the silver lining for Tesla is pure play EV manufacturers like itself need not worry about pushing vehicles into the market just to be carbon compliant.
Losing these potential customers to rival brands that must sell these vehicles at almost any cost, however, could make it more difficult to win them back in the future. Typically only dissatisfied customers don’t stick with their current brand if it has a model offered in their segment, raising the risk of entrenched market share losses for Tesla.
“The U.S. manufacturer will come under increasing pressure from incumbents that introduce more models to help with tighter 2025 [fleet emission] regulation,” wrote Matthias Schmidt, publisher of the monthly European Electric Car Study.
Moreover, the closer rivals come to hitting their mandatory targets, the fewer regulatory CO2 credits they will need to purchase from Tesla. Globally Musk’s company earned $2.7 billion from this highly profitable side business in 2024.
Altogether, the European passenger car market across all powertrain technologies—including mild, full, and plug-in hybrids—dipped 2.1% to approximately 995,000 vehicles.
