Tesla CEO Elon Musk has spent much of this year concentrating on the company’s robotics ambitions and securing shareholder approval for his new $1 trillion compensation package. During that time, the outlook for Tesla’s core business—selling cars—has grown increasingly uncertain.
Tesla is facing mounting sales pressure across the world’s three largest auto markets: Europe, China, and the United States. According to new data from the European Automobile Manufacturers’ Association, Tesla’s sales in Europe dropped 48.5% in October compared to the same month last year. For the full year so far, Tesla’s European sales are down roughly 30%, even as overall EV sales in the region grew 26%.
Visible Alpha data shows Tesla’s global vehicle deliveries are expected to fall 7% this year, after slipping 1% in 2024. This decline comes despite record third-quarter deliveries that were boosted by U.S. buyers rushing to take advantage of an EV tax credit before it expired on September 30.
The weak European performance suggests Tesla may not see a quick recovery from the sales downturn that began late last year. That slump followed Musk’s public praise of far-right figures, which sparked protests across Europe. Although Musk has scaled back political commentary in recent months, Tesla’s European business has yet to recover, pointing to deeper structural challenges.
In 2023, Tesla’s Model Y SUV was the world’s best-selling vehicle, regardless of fuel type. Since then, the company has slipped down the global rankings. Competitors have introduced a wide range of updated EVs—often at lower prices—while Tesla’s limited model lineup has grown dated, analysts say.
Tesla declined to provide comment.
Late last year, Musk told shareholders he expected vehicle sales to increase 20% to 30% in 2025. In January, Tesla projected a return to growth but did not provide a specific estimate, later withdrawing that guidance in the following quarter. By October, Tesla said any future growth would depend on broader economic conditions, progress in autonomous driving, and increased factory output.
Europe: Falling Behind Rivals
Tesla’s challenges are most severe in Europe, where more than a dozen EV models are available for under $30,000, with many more set to arrive. A surge of Chinese brands is also entering the market with competitive designs and wider model variety, including EVs, hybrids, and petrol vehicles.
Analysts interviewed by Reuters see no quick solution for Tesla in Europe. The company currently sells only two mass-market models—the Model 3 and Model Y. Tesla recently launched a lower-priced version of the Model Y to try to revive demand.
Meanwhile, competing EV options are expanding rapidly. In the United Kingdom alone, more than 150 electric models are available, including many from new Chinese entrants. At least 50 additional models are expected next year.
“Out of those 50, none are Teslas,” said Electrifying.com CEO Ginny Buckley.
Across Europe, China’s BYD sold 17,470 cars in October—more than twice Tesla’s total. Volkswagen’s EV sales also surged, up 78.2% through September to 522,600 units, tripling Tesla’s results. This marks a dramatic shift for Volkswagen, which struggled for years after the diesel emissions scandal and once lagged far behind Tesla.
“The problem for Elon Musk is not just his own cars and the Chinese carmakers,” said Ferdinand Dudenhoeffer of the CAR think tank at the University of Duisburg-Essen. “The problem for Elon Musk is also that the Europeans have caught up.”
China Sales Decline; U.S. Outlook Weakens
In China, Tesla’s sales and market share are also slipping, though less sharply than in Europe. Deliveries dropped to a three-year low in October, falling 35.8%. For the year through October, Tesla’s China sales were down 8.4%.
Tesla now faces renewed competition from established Chinese automakers such as Chery, as well as fast-growing newcomers like Xiaomi, whose YU7 model quickly emerged as a strong Model Y competitor.
In the United States, Tesla sales jumped 18% in September, according to Motor Intelligence, driven by consumers eager to claim the soon-to-expire $7,500 EV tax credit. However, sales reversed sharply in October, falling 24%, and auto executives anticipate continued weakness in overall EV demand.
Tesla may benefit as legacy manufacturers scale back their EV plans. Companies including General Motors, Ford, and Honda have slowed investments and cut back on planned models. Tesla’s recent rollout of cheaper Model Y and Model 3 variants—priced about $5,000 lower—may also help support market share.
Some analysts argue Tesla needs a new mass-market vehicle to reignite sales. Yet there is little indication a new model for human drivers is in development, as Musk increasingly shifts his focus toward self-driving robotaxis and humanoid robots.
Musk’s latest pay package does not require a dramatic increase in vehicle sales. The award unlocks if Tesla averages 1.2 million vehicles sold per year over the next decade, along with a rise in share value—a target roughly 500,000 fewer vehicles than Tesla sold in 2024.
