Tesla’s dominance in Europe once felt almost inevitable, but the numbers coming in for late 2025 and January 2026 show a very different reality: the region is now where the company’s weaknesses are most exposed.

1. From Dominance to Decline

For several years, Tesla was treated as the default EV in much of Europe, especially after the Model 3 and Model Y hit volume and Supercharger coverage matured. Early adopters and tech‑forward buyers saw few credible alternatives, and Tesla’s combination of performance, software, and charging made it the safest choice in a new category. By 2024, however, the landscape had already shifted: new BEV models arrived across almost every segment, Chinese manufacturers began pushing aggressively into Europe, and local brands finally caught up on range and charging speed. The result was that 2025 became the year when “Tesla by default” ended, and early 2026 registration data now shows that the slide is not just continuing, but accelerating. For owners and investors, this is no longer just a stock‑price story; it’s about residual values, service coverage, and how long Europe will remain a priority region.

January 2026 is especially important because it’s the first clean datapoint after an intense year‑end push and incentive changes in several markets. In theory, this should have been a month where a strong brand with loyal customers could cushion volatility. Instead, the data show double‑digit percentage declines in several key markets and an outright collapse in Norway—previously one of Tesla’s most loyal countries—which suggests structural, not temporary, problems. To make sense of what’s happening, you need to look at three layers at once: the hard registration numbers, the structural forces in policy and competition, and the softer—but very real—effects of brand and politics.

2. The Hard Data: How Bad Is It?

The first batch of January 2026 registration data from Europe is blunt: across five early‑reporting markets, Tesla’s registrations fell about 44% year over year, continuing more than two years of declines. In those markets, total registrations dropped from 3,605 vehicles in January 2025 to 2,021 in January 2026, meaning almost every second potential sale vanished compared to a year earlier. The table compiled by independent EV outlets shows steep declines in big, historically important countries such as Germany, France, and the Netherlands, which magnifies the impact beyond any single market narrative. Norway is the most dramatic example: registrations there plunged 88%, with just 83 Teslas registered in January—an astonishing fall in a country that had previously been considered a showcase for the brand. At the same time, there are pockets of resilience and even growth—sales in Spain and Italy jumped 70% and 75% respectively, and registrations rose 26% in Sweden and 3% in Denmark, illustrating a more complex patchwork than a simple “Tesla is dying in Europe” headline.

Looking at the broader trend, 2025 in Europe was already a “bloodbath” according to analysts: Tesla’s European sales dropped from around 326,000 vehicles in 2024 to just over 235,000 in 2025, a 27.8% decline. That followed a roughly 10% drop from 2023 to 2024, so 2025 was the second consecutive down year in a region where the overall battery‑electric vehicle market kept growing. One analysis of the first four months of 2025 found Tesla’s deliveries down 38.8% year on year while Europe’s BEV market expanded more than 26% over the same period, underlining that the problem is specific to Tesla rather than the category. By mid‑2025, rough estimates suggested Tesla’s BEV market share in the EU had fallen from around 16.8% in 2024 to about 7.7% in 2025, essentially cutting the company’s share in half in a single year. January 2026, with its additional 44% drop across the early‑reporting markets, is therefore not the start of a decline but a continuation—and potentially an acceleration—of a trend that has been building for more than two years.

3. Incentives, Competition, and Aging Products

To understand why the numbers look this bad, you have to start with structure, not just quarterly execution missteps. EV adoption in Europe has been strongly shaped by incentive regimes, from generous purchase subsidies and tax treatment to company‑car rules that favored zero‑emission vehicles. In countries like Norway, these incentives helped Tesla build a dominant position, but they also created a pattern where changes in policy can pull forward demand and then leave a vacuum when the rules change. Norway ended most of its EV incentives at the start of 2026, and that triggered a massive pull‑forward of Tesla purchases into late 2025—culminating in a record 34,285 Tesla sales for the full year and a 19.1% market share. When the incentives disappeared, registrations in January collapsed, dropping 88% to 83 vehicles, which is partly a hangover effect rather than a pure collapse in underlying interest.

However, policy explains only part of the story, because the broader European BEV market is still expanding even as Tesla’s share falls. What has changed is competition: European and Asian manufacturers now offer compelling alternatives across segments, with models from Volkswagen, Toyota, and others beating Tesla in Norway’s January rankings despite overall EV penetration remaining extremely high at around 94% of new car sales. Chinese brands in particular are entering Europe with aggressive pricing, strong infotainment, and increasingly robust safety and efficiency scores, forcing Tesla to defend from both above and below. At the same time, Tesla’s European lineup is still heavily dependent on the Model 3 and Model Y—vehicles that, although updated over time, look and feel similar to the versions buyers saw three or four years ago. In a market where many consumers change cars within that timeframe, a design that once looked futuristic can start to feel dated, especially when new rivals arrive with fresh styling, more comfortable interiors, or better‑tuned ride quality for European roads.

The combination of fading incentives, intense competition, and what many buyers perceive as aging products creates a scenario where price cuts become the primary tool to support volume. Throughout 2024 and 2025, Tesla repeatedly cut prices in Europe and other regions in an effort to stimulate demand, but these cuts eroded margins and, over time, trained shoppers to expect further discounts rather than rewarding early buyers. For existing owners, that hurts perceived value as the same car becomes available new at a lower price, compressing used values faster than they might have expected. For prospective buyers, the signal is that the product is under pressure, which can paradoxically further weaken demand if people start anticipating an eventual facelift or even deeper discounting. In that sense, the European slump is what happens when a powerful first‑mover advantage meets a more mature, more competitive market while the flagship products age in place.

4. Politics, Brand, and the “Values Mismatch.”

Beyond policy and product, Tesla has a unique brand problem in Europe: the CEO and the company are tightly interwoven in public perception, and Elon Musk’s political activity has become a factor in the buying decision for at least some customers. In markets like Norway, Sweden, Germany, and the Netherlands, early EV adopters often align strongly with environmental and progressive values, and they were drawn to Tesla not only as an innovative product but also as a symbol of a clean‑energy future. Over the past two years, Musk’s outspoken positions on issues ranging from platform moderation to his support for more right‑leaning political figures in Europe and elsewhere have clashed with that original image. A recent Reuters piece noted explicitly that Tesla’s struggle to regain market share in Europe comes “even as” BEV sales continue to rise and linked part of that difficulty to Musk’s support for far‑right figures, suggesting a disconnect with many European consumers.

It is difficult to quantify exactly how much of the sales decline is driven by politics versus price, products, and competition, but several signals point to a real, if hard‑to‑measure, impact. Social‑media sentiment in European EV communities has become more polarized, with a portion of early fans expressing discomfort with Musk’s views or choosing alternatives from brands they feel better match their values. Meanwhile, companies like Volkswagen and Toyota, while hardly flawless, present a more traditional corporate image, which may appeal to risk‑averse buyers in a time of economic uncertainty. In Norway, an article framing the January collapse in Tesla sales noted that models like the VW ID.3 and Toyota bZ4X had overtaken the Model Y, and argued that buyers “increasingly value diversity and, perhaps, a more conservative approach to design and reliability.” The shift here is subtle but important: Tesla is no longer the safe, obvious choice for someone who wants to signal environmental commitment, and in some circles it may now even feel like a controversial choice.

From an owner’s perspective, the brand narrative matters because it influences everything from how friends and colleagues perceive the car to how politicians and regulators treat the company. If lawmakers or city councils begin to associate Tesla with polarizing politics, they may be less inclined to support the company in negotiations over infrastructure, data sharing, or regulatory flexibility. At the same time, other OEMs can more easily position themselves as “aligned” with European policy goals on safety, labor, and climate, which might make them more attractive partners for public‑private initiatives like charging corridors or smart‑grid pilots. Over the long term, a sustained values mismatch could therefore reinforce the structural disadvantages Tesla already faces in Europe, even if the vehicles themselves remain competitive on technology and performance.

5. Price Cuts, Margins, and Owner Consequences

When demand weakens and competition intensifies, the quickest lever any automaker can pull is price, and Tesla has pulled it repeatedly over the last two years. In 2025, the company’s global deliveries fell roughly 9% to about 1.6 million vehicles, with Q4 deliveries at 418,227 units and production at 434,358, numbers that signaled a step back from the hyper‑growth of previous years. To maintain volume and factory utilization, Tesla pursued aggressive pricing strategies, cutting sticker prices in major markets and introducing lower‑priced variants of the Model 3 and Model Y in both the U.S. and Europe. Those cuts did help to support unit sales but compressed automotive gross margins, which fell significantly during the heaviest discounting before gradually recovering toward around 20.1% by late 2025 as the company pulled other levers. For European operations, where logistics, tariffs, and localized manufacturing costs add complexity, the margin pressure is particularly acute when combined with an unfavorable mix of lower‑priced models and softer demand.

The impact on owners is not purely theoretical; it shows up in residual values and financing conditions. Each time Tesla reduces the price of a new Model 3 or Model Y, the effective book value of recent used vehicles with similar mileage shifts downward, and leasing companies revise their assumptions on residuals and monthly rates accordingly. That can make it more expensive for future lessees, who face higher payments to compensate for expected depreciation, and it can leave current owners feeling like their cars have lost value faster than anticipated. In regions where resale value was a key part of the ownership equation—such as Norway and the Netherlands, where company‑car schemes and tax advantages historically made EVs attractive—the combination of price cuts and falling demand can become especially painful.

There is also a second‑order effect: if margins stay under pressure and volumes remain weak, Tesla will be forced to prioritize investments, and Europe may not be at the top of the list. That could mean a slower pace of Supercharger expansion in less‑dense areas, delayed upgrades for older stations, or a more cautious approach to opening new service centers in marginal markets. While Tesla has a strong existing Supercharger network across Europe, the perception that the company is no longer aggressively expanding or upgrading that network could influence both new buyers and fleet operators. Owners might also worry about the speed and quality of warranty and paid repairs if local service centers are understaffed or stretched across too many vehicles in an environment where the budget is constrained. In short, price cuts may help keep factories busy in the short term, but they increase the risk that European owners will bear some of the long‑term costs.

6. What Tesla Can Still Do in Europe

Despite the grim headlines, Tesla is not helpless, and the European story is not uniformly negative—January 2026 data even show significant growth in Spain, Italy, Sweden, and Denmark, suggesting there are pockets where the brand can still gain ground. One obvious lever is product: freshening the Model 3 and Model Y more visibly, considering region‑specific interiors or ride and noise‑tuning, and ensuring that upcoming models—whether a smaller, cheaper car or new variants—speak to European tastes rather than simply porting U.S. configurations. Tesla has already introduced more affordable versions of its core models in both the U.S. and Europe as a partial response to concerns about an aging lineup, and continuing that strategy while incrementally upgrading design could help reset the value proposition. The company also retains a powerful hardware and software platform in its existing fleet, which could be upgraded with new driver‑assistance and energy‑management capabilities that deliver tangible value to owners without requiring entirely new vehicles.

Beyond products, there is room for Tesla to rethink localization and relationships. In regulatory terms, the company has long used the Dutch RDW as a gateway for approvals that can apply across multiple EU markets, and as UN and EU frameworks for automated driving evolve in 2026, Tesla could position itself as a cooperative, transparent partner to European authorities. On the brand side, drawing clearer lines between Musk’s personal political activity and Tesla’s corporate stance—particularly in Europe, where corporate neutrality is often valued—could help repair the perception gap with environmentally‑minded consumers. Local leadership, partnerships with European energy utilities or grid operators, and high‑profile investments in European battery storage or renewable projects could also help align the company more closely with EU decarbonization goals. Finally, the presence of growth markets within Europe—such as Spain and Italy, where January 2026 sales rose sharply—provides live laboratories where Tesla can experiment with new marketing, pricing, and product approaches tailored to local conditions rather than assuming a single pan‑European playbook.

7. Scenarios for 2026–2027: What Comes Next?

Looking ahead, there are at least three plausible trajectories for Tesla in Europe over the next two years, each with different implications for owners and investors. In a best‑case scenario, the January 2026 collapse in markets like Norway proves to be a sharp but short‑lived hangover from incentive changes, and the combination of updated products, careful pricing, and the rollout of more advanced driver‑assistance features stabilizes sales. Under this scenario, Tesla’s volumes in Europe might not return to their 2022 peak, but they could settle into a sustainable level where the company remains one of the leading EV players alongside a broader mix of competitors. A mid‑case scenario sees Tesla effectively repositioned as a more niche, tech‑heavy brand, with lower volume but higher average revenue per vehicle, driven by software and services like supervised FSD, connectivity packages, and energy integration. In that world, the company’s share of mass‑market BEVs remains modest, but its overall profitability and strategic influence could be healthy if software really does become a larger part of the business mix.

The worst‑case scenario would involve a continued double‑digit decline in European registrations, further erosion of market share as new models from rivals capture the mainstream, and a deteriorating brand image that becomes hard to reverse. In that environment, Tesla might decide to treat Europe as a lower‑priority region, focusing capital expenditure and engineering attention on North America and parts of Asia where regulation and politics are more favorable to its autonomy and robotics ambitions. The risk for owners is that, while core services like software updates and Supercharger access would almost certainly continue, the pace of improvements could slow, and local support might feel thinner over time. At the same time, resale values could remain under pressure if potential buyers perceive Tesla as a fading brand relative to local and Chinese competitors, particularly in countries where public opinion has shifted. Realistically, the actual outcome will likely sit somewhere between these extremes, with some markets stabilizing or recovering and others continuing to weaken.

For owners and prospective buyers, thinking in scenarios is useful because it makes it easier to plan for uncertainty instead of anchoring on a single forecast. If you believe in the best‑case or mid‑case scenarios, then a Tesla purchased today in Europe may still deliver the blend of performance, software, and charging convenience that originally made the brand attractive, even if the badge carries slightly less status than it did a few years ago. If you are more worried about the worst‑case outcome—especially in smaller or more politically sensitive markets—it might influence how much you’re willing to pay, whether you opt for shorter leases, and how much weight you give to potential future features like FSD that depend on regulatory approvals and continued investment. In all cases, watching both the registration data and Tesla’s concrete actions in Europe—product updates, pricing moves, regulatory engagement, and infrastructure investments—will tell you far more than any single headline.

8. What This Means for European Tesla Owners

If you already own a Tesla in Europe, the current situation can feel unsettling, but it is important to separate perception from practical day‑to‑day impact. On a purely functional level, your car is still supported by over‑the‑air updates, a relatively dense Supercharger network, and a service organization that, while not perfect, is more mature than it was a few years ago. Tesla’s need to maintain software differentiation and uphold brand reputation in its existing fleet makes it unlikely that the company will abandon European owners, even if sales volumes remain under pressure. At the same time, you should be realistic about residual values: the combination of price cuts, rising competition, and shifting brand perception means that your Tesla may depreciate faster than early adopters once expected, and that should factor into decisions about when to sell or whether to upgrade.

For prospective buyers in Europe, the question is less “Is Tesla dying?” and more “What am I really paying for?” The vehicles still offer strong efficiency, performance, and a tightly integrated charging ecosystem, especially if you travel frequently across borders where Superchargers remain a competitive advantage. However, you now have far more alternatives than in 2019 or 2020, and many of those alternatives may better reflect your preferences for ride comfort, interior design, or corporate values. If you decide Tesla is still the right choice, it makes sense to negotiate hard, pay close attention to price movements, and consider total cost of ownership—including expected depreciation—rather than focusing solely on up‑front cost or monthly payments. Ultimately, the European slump is a reminder that Tesla is not invincible, but it is also not going away; it is becoming one strong player in a crowded field instead of the only obvious answer.

9. FAQ

Will Tesla’s European decline hurt my access to service or Superchargers?
In the short to medium term, the decline is unlikely to dramatically affect access, because Tesla already has sunk costs in its European charging and service network and still sells a substantial number of vehicles in the region. However, if the downturn persists for several years, growth in new locations could slow, and some marginal service expansions might be delayed, especially in smaller markets.

Should I worry about my car’s resale value over the next 3–5 years?
Resale values are already under pressure due to price cuts on new vehicles and the rapid expansion of competing BEVs with strong specs and attractive pricing. If Tesla continues to discount heavily or if European demand remains weak, depreciation could be steeper than the optimistic scenarios many early buyers assumed, so it is wise to budget conservatively.

Does this decline mean Tesla is “finished” in Europe?
The data show a serious and sustained loss of share, but they also show growth in markets like Spain, Italy, Sweden, and Denmark, and EV demand overall is still rising. It is more accurate to say that Tesla has lost its default status and now has to fight for each sale in a competitive, politically complex market rather than being finished as a meaningful player.

How might FSD or other software features change the picture?
If Tesla is able to navigate new UN and EU regulations to deploy more advanced supervised driver assistance (often marketed as FSD) in Europe, that could restore some of its technological edge and justify higher prices or subscription revenue. However, regulatory timelines are uncertain, and it would be risky to base a purchase decision entirely on software that may arrive later or in restricted form.

Is now a bad time to buy a new or used Tesla in Europe?
It depends on your priorities: if you value Tesla’s software and charging ecosystem and can obtain a good discount, this period of weakness may offer attractive deals. If you are more sensitive to resale value, brand perception, or political and regulatory risk, you may want to wait for clearer signs that Tesla has stabilized its European strategy—or consider the growing range of alternatives.