Why Tesla’s European EV market share is crumbling—Except in Norway

Tesla Inc. (NASDAQ: TSLA) faced another major blow in May 2025 as its vehicle sales plummeted across key European markets for the fifth straight month. While electric vehicle sales surged broadly across the continent, Tesla’s numbers fell sharply in countries like Sweden, Portugal, France, Denmark, the Netherlands, and Spain. Analysts cite CEO Elon Musk’s controversial political affiliations, an aging product portfolio, and fierce competition from European and Chinese manufacturers as key reasons for the brand’s regional underperformance.

The lone bright spot came from Norway, where Tesla’s new Model Y helped drive a 213% year-on-year increase in May registrations, offering a potential playbook for recovery as the refreshed SUV rolls out across other EU markets this month.

What Happened to Tesla’s Sales in Europe in May 2025?

Sales of Tesla vehicles collapsed across several key markets. According to national automotive data agencies, new registrations fell by 53.7% in Sweden, 68% in Portugal, and 67% in France, while the Netherlands saw a 36% drop, Denmark 30.5%, and Spain 19%. In stark contrast, EV sales in each of these countries reportedly rose by approximately 25% during the same period, underscoring a broader market shift that is leaving Tesla behind.

France’s national automotive industry body reported just 863 Tesla registrations in May, while Portugal’s count stood at 292 vehicles. Sweden’s figure was 503. Analysts noted that the sales slump has widened Tesla’s gap with local and Chinese rivals, many of which have ramped up releases of newer and more affordable EVs. Volkswagen‘s electric ID.7, BYD’s Seal and Xpeng’s G6 all outsold Tesla’s offerings in Sweden in May, according to local retail data.

Why Is Tesla Losing Market Share in Europe?

Industry observers point to several overlapping issues. The most pressing is Tesla’s lack of new mainstream models since the launch of the Model Y in 2020. Unlike competitors such as Volkswagen and Renault that are refreshing their EV portfolios regularly and targeting the under-€30,000 price point, Tesla has largely remained reliant on the Model 3 and Model Y for volume.

Tesla’s higher price points and limited range are further challenged by regulatory shifts and the rising presence of cost-effective Chinese EVs. While legacy European brands are leveraging government subsidies, local manufacturing, and brand familiarity, Tesla is increasingly being perceived as a premium niche brand rather than a mass-market player.

Another factor weighing heavily on Tesla’s brand in Europe is Elon Musk’s growing association with far-right political groups and his support of controversial figures. His recent exit from a Trump-linked government advisory role in the U.S. has done little to calm tensions in Europe, where protests and vandalism at Tesla showrooms and charging stations have become increasingly frequent in cities across Germany, France, and the Nordics.

Institutional analysts suggest that Tesla’s appeal to progressive EV buyers in Europe has diminished significantly in the past year, particularly in ESG-conscious markets like France and the Netherlands.

Why Did Tesla Sales Surge in Norway?

In contrast to the broader slump, Norway saw Tesla’s registrations rise by 213% year-on-year in May 2025, reaching 2,600 vehicles, according to the Norwegian Road Federation. This sharp uptick is largely credited to the early launch of the refreshed Model Y, which included design and performance updates that resonated with Norwegian consumers.

Tesla also introduced an aggressive 0% interest loan package for the new Model Y in Norway, further boosting demand. With EVs accounting for nearly 93% of all new car registrations in the country so far this year, Norway remains Tesla’s most resilient European market. The Model Y has maintained its position as Norway’s best-selling vehicle for the third consecutive year, and the company’s performance in the country continues to serve as a critical benchmark for its regional strategy.

EV industry experts have suggested that the Norwegian experience highlights the importance of model innovation and targeted financing incentives. Without a similar refresh across other EU markets, Tesla may struggle to replicate Norway’s success elsewhere.

Is the Refreshed Model Y a Turning Point for Tesla in Europe?

The company has now opened orders for the updated Model Y in Germany, France, Italy, and the United Kingdom, with deliveries for the standard-range version—Tesla’s best-selling configuration—set to begin this month. This launch represents Tesla’s most significant European model update in nearly four years and will be closely watched as a litmus test for the brand’s ability to regain ground.

Tesla is also offering discounts and interest-free loans in select markets to support its sales push. However, without a full lineup refresh or the long-promised $25,000 “Model 2,” which remains in development, the Model Y may offer only short-term support to a brand under intense pressure from all sides.

Quentin Wilson, founder of the EV lobbying group FairCharge, commented that while Tesla’s pricing strategy may boost volumes temporarily, the lack of new models risks brand fatigue among European buyers.

What’s the Market Response and Institutional Sentiment Around Tesla?

Tesla shares fell 2.2% in pre-market trading following the latest sales data. By mid-morning U.S. time, the stock had recovered slightly to $340.03, still down 1.86% on the day. Analysts noted that short positions have increased in recent weeks, reflecting investor concerns about the company’s European exposure.

Long-only institutional flows appear mixed. ESG-focused funds and European pension investors have reportedly begun trimming their exposure to Tesla, citing reputational risk. Meanwhile, some U.S.-based hedge funds continue to hold Tesla on the strength of its margins, AI-based autonomy stack, and energy storage pipeline.

Brokerage consensus on TSLA remains split between “hold” and “underperform,” with bulls pointing to possible upside from China and energy products, and bears citing stagnation in Tesla’s auto business and growing brand damage in its second-largest market after the U.S.

What’s Next for Tesla in the European EV Market?

As the competition intensifies, Tesla’s long-term success in Europe will depend on how quickly it can expand its product offerings, adapt to regional policy and price pressures, and rebuild brand equity. The Norwegian surge offers a glimpse of what the company can achieve when product timing, pricing, and consumer sentiment align.

But with Chinese automakers accelerating their EU footprint, European OEMs retooling rapidly for EV dominance, and policy tailwinds shifting toward affordability and circular manufacturing, Tesla’s window to course-correct may be narrowing.

For now, Europe remains both a warning and an opportunity for Tesla—a region where brand power alone is no longer enough.