Tesla manufactures and delivers 61,662 electric vehicles from the Giga Shanghai plant in May, marking a 15% decrease compared to the same period last year.
In a notable shift, Tesla's sales figures have taken a hit in China, Europe, and Canada. This downturn can be attributed to intensifying competition, regulatory challenges, and reputational factors.
Europe
Tesla's market share in the EU, UK, and EFTA has seen a significant drop, falling from 3.4% to 2.8% within a year. Sales figures plummeted from 44,990 to 34,781 vehicles in June 2025. Countries like Sweden, Denmark, and the Netherlands have witnessed a steep decline in Tesla registrations, with a drop of 52%-86% in July. This contrasts with growing overall car sales in these countries.
Chinese EV maker BYD has seized the opportunity, with sales nearly fivefold in Germany, highlighting a strong shift toward affordable, competitive EVs from Chinese brands despite tariffs.
Regulatory and Legal Factors
European consumer protection laws impose full liability on Tesla for Full Self-Driving (FSD) safety issues, with no arbitration or confidentiality clauses allowed. This regulatory environment is unique and more restrictive than in other markets, hindering Tesla’s ability to innovate or sell certain features there.
China and Canada
While direct recent sales data from China and Canada weren't given, Tesla’s challenges in China likely mirror the competitive pressure from strong local manufacturers like BYD and others that have significantly grown in global markets, as seen in Europe. Canadian market challenges may be similar given aligned consumer preferences and regulatory environments. Tesla’s brand perception and Musk’s political controversies might also dampen sales in these regions.
Canadian Government's Response
The Canadian government's decision to exclude Tesla from the iZEV rebate program is a response to political backlash from Elon Musk's association with U.S. President Donald Trump. This move further impacts Tesla's sales in Canada, as the company is not eligible for the incentives provided by the program.
Sales Figures
Tesla's struggles are evident in the sales figures. May 2025 was Tesla's second-worst month in the past two years, with only February 2024 having lower sales (60,635 units). In May 2025, Tesla delivered 61,662 Model 3 and Model Y units from Giga Shanghai.
In conclusion, Tesla’s sales struggles reflect a combination of increasing EV market competition led by Chinese brands, regulatory constraints particularly in Europe, and reputational issues that affect consumer demand across these important regions.
- European consumers are shifting preferences towards more affordable, competitive electric vehicles from Chinese brands, such as BYD, due to growing market presence of these manufacturers.
- The European regulatory environment imposes full liability on Tesla for Full Self-Driving safety issues, which is unlike other markets and limits Tesla's ability to innovate or sell certain features.
- In China and Canada, Tesla faces intensifying competition from local manufacturers, as well as reputational challenges due to Elon Musk's political controversies, that may affect its sales in these regions.
- The Canadian government's decision to exclude Tesla from the iZEV rebate program is a response to political backlash resulting from Elon Musk's association with U.S. President Donald Trump, further impacting Tesla's sales in Canada.
