Jamie Spencer
Surging competition and Musk’s politics weigh on EU demand
Tesla’s European woes deepened in February, as vehicle registrations across the EU, UK, and EFTA dropped 40.1% year-over-year, according to new data from the European Automobile Manufacturers’ Association (ACEA). Over January and February combined, Tesla registrations are down a staggering 42.6%, totaling just 26,619 units.
The decline comes despite an overall boom in the European electric vehicle (EV) market. Total EV registrations rose 26.1% in February and are up 31.4% so far this year — a sharp contrast to Tesla’s slump.
Multiple headwinds hit Tesla
Analysts point to intensifying competition in Europe and China, model changeovers, and growing consumer backlash against CEO Elon Musk’s politics as key factors behind the downturn.
- February Tesla EV registrations: 16,888 (−40.1%)
- Total EU+UK+EFTA EV registrations: 164,646 (+26.1%)
- January–February Tesla EV registrations: 26,619 (−42.6%)
RBC analyst Tom Narayan acknowledged the rising pressure in Europe but remains bullish on Tesla, maintaining an Outperform rating with a $320 price target — though revised down from $440 last week. He cited upcoming launches like the Model Y refresh and a lower-cost model as possible catalysts for recovery.
“There was always going to be increasing competition in Europe,” Narayan told Yahoo Finance. “But EVs are still relatively underpenetrated globally. A rising tide could lift all boats — including Tesla.”
Political damage control
Narayan did not address the growing reputational risk surrounding Elon Musk, whose vocal support for far-right figures has alienated many would-be EV buyers, especially in Europe. Musk’s polarizing image is becoming an increasing liability in key markets where climate-conscious consumers are opting for alternatives.
Meanwhile, in the U.S., early 2025 data is mixed. While Narayan claims Tesla sales are holding up domestically, S&P registration data suggests a soft start to the year.
March data is critical
The real test will be March sales figures, which will reflect the early performance of the refreshed Model Y. Investors will get clarity next week when Tesla reports Q1 deliveries — a closely watched metric that could determine whether the company is managing to reverse its decline.
Tesla is losing ground in Europe just as the region’s EV adoption accelerates. Whether upcoming product launches and a still-underpenetrated global EV market can offset reputational and competitive headwinds remains to be seen.
