European sales crash

If you just look at the European sales figures for Tesla’s cars in isolation, the situation certainly appears dire. According to JATO, Tesla sold 18,121 cars in January 2024, but just 9,913 units in the same month in 2025—a collapse of 45%. Germany’s drop was particularly telling, considering this is where Teslas are made in Europe, with 3,150 cars shipped in January 2024 falling to 1,277 in 205—a 59% decrease. France was even worse, with a 63% drop in sales. Spain fell by 75%, but that’s not a huge EV market yet. In the U.K., the fall was a more modest 18%.

In February, the U.K. bounced back considerably, with 3,851 Tesla sales, a 21% increase over the previous year. But according to local sales data reported by Electrek, the falls in other European markets have continued, with German down nearly 71%, and most countries losing over 40%. This is in a booming European market for EVs, with JATO registering a 37.3% increase year-on-year for January, equating to 16.7% of the overall market.

However, there is some sense of déjà vu in this. 

In August, we reported on BMW going ahead of Tesla in electric sales in Europe, only for Tesla to return to form a month later. In the U.K., Tesla went from 7^th place with 5% of the EV market in January 2025, back to the top again with 19% in February. If there’s an “Elon effect” damaging the Tesla market, it doesn’t appear to be hitting Britain that obviously—at least, not yet.

The first thing to consider is the cyclic nature of Tesla sales. The company reports its figures quarterly and for years has followed a pattern where the last month of a quarter (i.e. March, June, September and December) is always a bumper one for deliveries. This is then followed by a drop in the next month because there has been a shift of numbers to the previous quarter end, moving them up from the subsequent month. In the U.K., for example, Tesla had a whopping 20% of EV sales in December 2024, before that drop to just 5% in January 2025 already mentioned.

The bounce back in U.K. sales in February is a surprise—you’d expect this to happen in March for the end of the quarter. However, there’s another factor to take into account. Tesla’s best-selling car, the Model Y, just had a refresh. The initial Launch Edition versions are due for delivery in May in Europe, but these are extremely expensive (£60,990), and most mainstream models will be arriving in June if ordered right now.

ADEK BERRY/AFP via Getty Images

It’s quite possible that European buyers have put off Tesla Model Y purchases in favor of the new model, which will significantly dampen current sales. After all, who wants to have the old model when the new one is just a few months away? The Model Y had been on sale, mostly unchanged, since it was launched at the end of 2021. It’s also likely that the surge in U.K. numbers comprises old stock of Tesla Model Y cars being snapped up at favorable prices. This is further accentuated by the fact that new EVs costing more than £40,000 in the U.K. incur higher annual tax rates from April 2025, and almost all Teslas fall into this price category. So buyers may want to get their purchases in before this tax rise takes effect.

Falling Tesla stock prices

It’s clear that investors have been reading the negative European sales reports with concern. From a high of $484 in December, at the time of writing Tesla shares had dropped to $246, a fall of 49%. The rapid descent appears to have begun around January 20^th, when Elon Musk made his much-maligned hand gesture at Trump’s inauguration. However, the share price drop also needs to be put in context. Six months ago, Tesla shares were at $216 and a year ago they were at $179. So long-term investors might not be panicking just yet. Shares always go up and down, and sometimes quite wildly.

The true test will be when we see just how many refreshed Model Y cars ship by the end of June in Europe. This information should be available in early July. Musk could also pull a rabbit out of his hat by launching the long-awaited “$25,000” smaller Tesla, which has been variously described as the Model 2 or Q. This was expected in 2023 or at the latest in 2024, having been teased at an investor day in 2020. In typical Elon Musk “alternative time”, however, expectations have been dashed, and there are no clear indications that a new cheap Tesla is imminent, beyond some cryptic comments by Tesla’s CFO during investor meetings that it would arrive in the first half of 2025. Musk’s interests have shifted to the “Robotaxi”, SpaceX and DOGE activities for the US government.

Nevertheless, while many things Elon Musk promises don’t come to pass, or take much longer than implied, some of them do happen. In fact, enough of Musk’s pledges have happened for Tesla to have had the enormous disruptive effect we’ve seen on the auto industry, shifting it towards battery-electric vehicles (BEVs) in a matter of years. According to EV Volumes, 19.7% of car sales in 2024 were EVs, and around 62.5% of those were BEVs. The shift has been dramatic, from just 2.6% in 2019.

Then there’s a final question about whether people really buy a car, even an electric one, based on how they view the politics of the company’s CEO. In an early adopter market like that for BEVs, which is intertwined with concerns about sustainability and climate change, this will be more the case. As we’ve argued before in Fortune, there is a potential mismatch between Elon Musk’s current political stance and the typical BEV buyer.

But EVs are going mainstream, and average car buyers don’t care so much about making political statements with their automotive choices—they just want the best car they can get for their budget. The Tesla Model Y and 3 are still very good vehicles with leading-edge features and technology. Will that be enough to persuade purchasers that the online and political behavior of Tesla’s CEO isn’t so important? Perhaps not, but even though there are some very negative sales figures so far this year, it’s not yet the moment to call time on Tesla in Europe—give it until at least July.