Tesla’s European sales continued to struggle in early 2026, with January registrations falling sharply across key markets, according to preliminary data. The decline follows a challenging 2025, during which the electric vehicle manufacturer saw its volume drop by 27.8% to just over 235,000 units, down from roughly 326,000 in 2024.
While official figures from the European Automobile Manufacturers’ Association (ACEA) for January are expected mid-month, early reports indicate a continued downward trend. In France, Tesla registrations fell 42% to 661 units, while Norway experienced an even more dramatic decrease of 88%, registering only 83 units. Even though Sweden and Denmark recorded year-over-year increases in registrations, these gains were insufficient to offset declines elsewhere.
The struggles come after Tesla’s market share in Europe fell to between 1.4% and 1.7% in 2025, a significant drop from the 2.4% it held in 2023. The company’s deliveries often follow a quarterly pattern, with higher volumes at the end of each period, but analysts estimate the year-over-year decline for January could reach as high as 50% in some regions.
Several factors are contributing to Tesla’s difficulties. A recent study by Escalent found that 38% of European consumers believe Tesla’s products are losing their appeal. The aging of Tesla’s product line is similarly a concern, with the Model S and Model X slated to end production in Summer 2026 without immediate replacements announced. The company is currently relying on the Model 3 and Model Y, despite recent refreshes.
Competition from Chinese automakers is intensifying. BYD saw a 268% surge in European sales throughout 2025 and continued to gain ground in January 2026, with brands like NIO and XPeng also making inroads. XPeng debuted its P7+ model at the Brussels Motor Present in January, directly targeting the Model 3 demographic. BYD surpassed Tesla as the world’s biggest seller of battery electric vehicles (BEVs) in 2022, and its 2024 revenues exceeded those of Tesla, reaching $107 billion compared to Tesla’s $97.7 billion.
Tesla’s sales were also impacted by the expiration of the $7,500 federal EV tax credit in the United States at the end of September 2025, which led to a surge in Q3 sales followed by a decline in Q4. BYD, in contrast, benefited from ongoing incentives in China and expansion in Southeast Asia and South America. Tesla delivered 418,227 vehicles in Q4 2025, a 16% drop compared to the same period in 2024.
Tesla is increasingly focusing on artificial intelligence (AI), with CEO Elon Musk describing the current moment as a “critical inflection point” for the company. The company unveiled its fully autonomous robotaxi, the Cybercab, in 2025, with mass production scheduled to begin in April 2026 at Gigafactory Texas. Musk aims for a production capacity of up to 2-3 million units annually, with a goal of deploying 1 million robotaxis in commercial service.
