At the beginning of 2025, the European new energy vehicle market has shown an unprecedented complex situation, and Tesla's sales in the European market have encountered a "Waterloo". This incident not only shook the automotive industry, but also sounded the alarm for the development of the entire new energy market. According to the European Automobile Manufacturers' Association (ACEA), Tesla's new car registrations in the EU, EFTA and the UK market in January 2025 were only 9,945, down 45.2% from 18,161 in the same period last year. Behind this data is the difficulties faced by Tesla in the European market, and it is also the "chill" encountered by the European new energy market in the process of transformation.
1. Tesla's sales decline: a "perfect storm" intertwined with multiple factors
Tesla's sharp drop in sales in Europe is not accidental, but the result of a combination of factors. First, Tesla is currently busy revamping its Model Y production line, a process that has a direct impact on deliveries. Tesla's chief financial officer, Vaibhav Taneja, warned on the first earnings call that the revamp would lead to a multi-week shutdown. Therefore, Tesla's tight supply in the European market is undoubtedly a major reason for the sharp decline in its sales.
Secondly, Tesla CEO Elon Musk's political stance has caused a lot of controversy. His support for far-right parties in Europe and his disparagement of Zelensky with Trump may well have had an impact. In Europe, consumers pay more attention to political positions, and Musk's actions have undoubtedly damaged Tesla's brand image in Europe, which in turn affects consumers' purchase decisions.
In addition, the intensification of market competition is also an important factor in the decline in Tesla's sales. Local European automakers such as Volkswagen and Renault have accelerated their deployment in the field of electric vehicles and their market share has been increasing. At the same time, the performance of Chinese brands such as SAIC in the European market is also very eye-catching. SAIC sold nearly 17,000 vehicles in Europe in January, up 37% year-on-year, and its market share rose to 2.3% from 1.7% a year earlier. The rise of Chinese brands has provided European consumers with more choices, further intensifying competition in the market.
Figure: Tesla's sales have halved, and the "chill" of the European new energy vehicle market is pressing
2. European New Energy Market: The Pain of Transformation and the Pressure of Competition
The decline in Tesla's sales also reflects the challenges faced by the European new energy market in the process of transformation. On the one hand, the sharp decline in the market share of traditional fuel vehicles has had a significant drag on the overall market. According to the data, in January 2025, the market share of gasoline vehicles in Europe fell to 38%, a significant contraction from 48.7% in the same period last year. This trend is closely linked to the EU's increasingly stringent carbon emission regulations, which will face huge fines from 2025 onwards, forcing manufacturers to reduce production capacity and raise prices of gasoline-powered vehicles in order to "force" consumers to switch to electric vehicles.
On the other hand, although sales of pure electric vehicles and hybrid vehicles have increased, the growth rate has not been enough to compensate for the contraction of the gasoline vehicle market. The sales volume of pure electric vehicles increased by 37.3% year-on-year, and the market share reached 16.7%; The number of hybrid vehicle registrations increased by 18.4%, and the market share was 34.9%. However, consumers are more sensitive to the cost of buying a car in a high-interest rate environment, and some users even choose to delay changing their cars, causing the market to enter a "low desire cycle". In addition, economic uncertainty has also dampened car purchase intentions, with major markets such as France, Italy, Germany and the United Kingdom all recording negative growth.
3. Industry Challenges and Opportunities: How to Break the Road to Transformation?
The plight of the European auto market reflects the challenges faced by the automotive industry in the process of transforming to electrification and intelligence. On the one hand, the shrinkage of the traditional fuel vehicle industry chain and the lack of consumer confidence are pushing the industry into a complex pattern of "ice and fire". On the other hand, the rapid development of the new energy vehicle market has also brought new opportunities for car companies.
Responding to regulatory pressures to accelerate the transition to electrification. The EU's carbon emission regulations have put forward higher requirements for car companies, and have also accelerated the transition to electrification. However, car companies face many difficulties in the transformation process, such as high battery costs and unstable supply chains. To meet these challenges, OEMs need to increase R&D investment, improve battery technology, reduce costs, and strengthen supply chain management to ensure a stable supply of raw materials.
Enhance brand image and enhance consumer trust. Brand image is an important asset for car companies in market competition. Tesla's sales have declined, in part because of the damage to its brand image. Therefore, car companies need to pay attention to brand building, establish a good corporate image, and enhance consumer trust. At the same time, car companies also need to pay attention to the actual needs of consumers and provide better products and services to win market share.
Strengthen technological innovation and promote intelligent development. Intelligence is an important trend in the future automotive industry. Tesla's much-anticipated upgrade to its self-driving system in the Chinese market has not been implemented as smoothly as expected, and many car owners have expressed significant disappointment. Therefore, car companies need to strengthen technological innovation, accelerate the research and development and application of intelligent technologies such as autonomous driving, and enhance the competitiveness of their products. At the same time, car companies also need to pay attention to the consumer experience and continuously optimize product functions to meet consumers' needs for intelligence.
4. Conclusion
Tesla's sales have halved and the "chill" of the European new energy market is pressing, and this series of phenomena has sounded the alarm for the automotive industry. In the process of transforming to electrification and intelligence, car companies are facing many challenges, but they also contain huge opportunities. Only by actively responding to challenges and seizing opportunities can we be invincible in the fierce market competition. In the future, European automakers need to accelerate the transformation of electrification, enhance brand image, strengthen technological innovation, and promote intelligent development to achieve sustainable development.
