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Tesla (TSLA) experienced a significant downturn in European sales for May 2025, with registrations plummeting 53.7% in Sweden to 613 vehicles, 68% in Portugal to 547 vehicles, 19% in Spain, and a stark 67% in France, the EU’s second-largest market, according to industry data. These declines reflect a confluence of challenges: intensifying competition from Chinese EV makers like BYD Company (BYDDY) and Xpeng (XPEV), which have gained market share with cheaper, innovative models, and TSLA’s aging vehicle lineup, unchanged since the Model Y refresh. Additionally, CEO Elon Musk’s political alignment with President Donald Trump and his vocal far-right stance in Europe have fueled consumer backlash, with protests and vandalism targeting TSLA showrooms contributing to a reputational crisis that has eroded brand loyalty in key markets.

• In contrast, Norway emerged as a bright spot, with TSLA sales surging 213% yr/yr to 2,346 vehicles in May, driven predominantly by demand for both new and existing versions of the Model Y, up from 690 units the previous year. The introduction of the revamped Model Y, featuring updated design and features, has resonated strongly in Norway, where EVs dominate. To stimulate demand, TSLA has implemented aggressive incentives across Europe, including interest-free loans for the new Model Y in Norway, alongside discounts and financial incentives in Sweden, Germany, France, and the UK.
• The robust performance in Norway could foreshadow improved results across other EU markets, as TSLA’s websites in Germany, Britain, France, and Italy indicate that deliveries of the lowest-cost version of the refreshed Model Y are set to commence in June 2025. These deliveries were not reflected in May’s sales data, suggesting potential upside in the coming months as the updated model becomes more widely available. If the Norwegian market’s response is indicative, the broader rollout of the cost-competitive Model Y could help Tesla regain traction in Europe.
• June is a pivotal month for TSLA. Beyond its European sales efforts, the company is poised to launch its much-anticipated robotaxi service in Austin, Texas, with a modest fleet of fewer than 100 Model Y vehicles equipped with Full Self-Driving software. This “invite-only” pilot, supported by approximately 300 test operators and remote teleoperators, is a critical step toward scaling autonomous driving, with internal estimates projecting an initial low single-digit billion-dollar revenue opportunity, potentially growing to $20-$30 bln or more as the service expands to cities like San Francisco by late 2026.

In conclusion, TSLA’s May 2025 sales in Europe reflect a deepening slump, driven by fierce competition, an outdated lineup, and reputational damage tied to Musk’s political activities. However, the strong Norwegian performance, fueled by the refreshed Model Y, and the impending robotaxi launch in Austin signal potential catalysts for recovery, with the lower-cost Model Y and autonomous driving initiatives offering hope for brighter days ahead, provided TSLA can navigate execution and regulatory hurdles.