Tesla's European Sales Drop 40% in February Amid Weak Demand and Rising Competition

Tesla's European sales fell by over 40% in February as the automaker struggled with shrinking market share, intensifying competition, and growing backlash over CEO Elon Musk's controversial statements.

According to data from the European Automobile Manufacturers’ Association (ACEA), Tesla’s (NASDAQ: TSLA) new car registrations in the EU, EFTA, and the UK declined by 40.1% year-over-year last month, dropping to just 16,888 units. The company’s market share in the region also shrank to 1.8%, down from 2.8% a year earlier.

This follows a similar slump in January, marking two consecutive months of declining sales for Tesla in Europe.

The downturn comes despite a 26.1% year-over-year increase in overall battery-electric vehicle (BEV) registrations across Europe. Competitors, including China’s SAIC, reported strong growth during the same period.

From January to February, BEVs accounted for 15.2% of total European auto sales, making them the third-largest segment. Hybrid vehicles remained dominant with a 35.2% share, while petrol cars held 28.6%.

Tesla’s struggles contrast with the performance of traditional automakers like Volkswagen (ETR: VOWG_p), Renault (EPA: RENA), and BMW (ETR: BMWG), which posted sales growth despite a 2.6% overall decline in European car registrations.

The company faces mounting pressure from Chinese EV makers and the rising popularity of hybrid vehicles, which have gained consumer preference over pure electric models in recent years.

In response to slowing demand, Tesla is preparing to launch a refreshed version of its best-selling Model Y SUV. A Reuters report suggests the company may cut the new model’s price by up to 20% to boost sales.

Meanwhile, Tesla’s brand image has taken a hit due to Musk’s polarizing political stance, including his support for far-right groups in Germany and ties to former U.S. President Donald Trump. In March, Tesla showrooms and vehicles were targeted in protests across the U.S. and Europe.

Beyond Europe, Tesla is grappling with weakening demand in key markets like North America and China. Musk recently urged employees not to sell their company shares during an internal meeting.

Since November, Tesla’s stock has plummeted by nearly 50%, reflecting growing investor concerns over its performance.