Tesla’s grip on Europe loosened markedly in late 2025. In October, the company’s EU sales slumped nearly 49% from the previous year, even as overall EV registrations rose, a stark sign that demand is shifting to newer, more affordable models. Analysts now peg Tesla’s 2025 global deliveries at about a 7% decrease, underscoring a broader deceleration.
Competitors are stepping in to fill the gap. This year, BYD sold more cars than Tesla in the EU for several months. In October, BYD sold 17,470 vehicles, which is more than double Tesla’s total. Volkswagen also said that its all-electric deliveries in Europe rose 78% to 522,600 units through September. Many low-cost Chinese brands and resurgent European brands are exerting pressure on Tesla’s two-model mass-market lineup.
The broader market stayed robust. Rho Motion, a research firm, found that European EV registrations were strong in September and October. It’s clear; Tesla is losing its home-field advantage in both Europe and China at a time when rivals are working harder than ever to take over the future of electric vehicles.
Tesla demand shifts as Chinese EV brands gain share
China, Tesla’s second-largest market, is not a safe haven. The Shanghai plant’s October retail sales fell to 26,006 vehicles, a drop of 35.8% from the same month last year. This brought the company’s market share down to 3%, the lowest level in three years.
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At the same time, Chinese competitors are quickly growing at low prices. The new G6 from XPeng costs RMB 176,800, and the Onvo L60 from Nio started pre-sales at RMB 219,900. Both of these cars are direct competitors to Tesla’s Model Y.
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The Model Y+ is Tesla’s answer in China. It has a range of 821 km on the CLTC and costs RMB 288,500, which is still a lot more than many other options in China.
Chinese companies are also growing outside of China. In November, BYD shipped more than 130,000 cars to other countries, breaking a record. This year, the company has outperformed Tesla in certain parts of Europe.
Volkswagen EV sales strategy: ‘In China, for China’ cuts costs
A major competitive twist comes from Volkswagen. The automaker says that developing EVs in China for the Chinese market can cut costs by up to 50 percent and shorten development time by about 30 percent, leveraging its expanded Hefei hub and localized suppliers.
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Volkswagen’s growth is already clear in Europe, where its all-electric deliveries reached 522,600 by the end of September. The company is also looking into sending cars made in China to other markets.
Investor takeaway: Electric car market trends show Tesla competitors and issues
This seems less like a problem with demand for EVs and more like a problem with Tesla’s ability to compete. More and more people in Europe are registering electric vehicles, and China’s pipeline continues to grow. What has changed is who gets the growth and how much it costs.
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Tesla’s sales in Europe are going down because there are so many new, cheaper models from Chinese and European brands. There won’t be much help unless Tesla releases new models faster and lowers prices even more.
What to watch next: European EV market analysis, Model 3/Model Y sales, and BYD sales growth
- Pricing: Will Tesla cut again in Europe or China to defend its share, and what would that imply for auto gross margin?
- New models: A clear sign that the market is bullish would be a specific date for a car under $30,000 or a major update to the Model 3 and Model Y.
- VW spillover: If Volkswagen sells more China-made models in more places, its cost advantage could show up in places other than China and Europe.
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