For Tesla, 2025 was a year to forget.
Yes, the company finally launched its Tesla Robotaxi service after years of promises (though the couple dozen on the road are a far cry from the millions promised), but it also suffered reputational harm that many felt it wouldn’t be able to fix.
China: 6.4 million EVs sold
Europe: 2.2 million EVs sold
U.S.: 1.2 million EVs sold
Rest of world: 1 million EVs sold
Source: International Energy Agency
The year 2025 is the second consecutive one in which Tesla delivered fewer cars than it did the previous year. Tesla delivered 1.79 million vehicles in 2024 while producing 1.77 million. In 2023, the company delivered 1.81 million cars and produced 1.85 million.
While the company does not break out its sales by region, there is evidence that the company’s decline has been driven by rough spots in China and Europe, the two largest electric vehicle markets in the world.
The company reported falling sales across the European region for most of 2025, driven by numerous issues, including CEO Elon Musk’s increased involvement in politics.
Musk has publicly endorsed the AfD, a German right-wing party that some view as extremist, and he was accused of doing a Nazi salute on stage.
Tesla’s sales in Europe declined by nearly 40% from January to April 2025, compared to the same period the previous year. In June, sales dropped another 39%. Tesla’s first-half sales were down 44% in Europe, per the European Automobile Manufacturers Association (ACEA).
That trend followed into the second half of 2025 across the continent, including the United Kingdom, where registrations dropped by more than 29% in December, according to Reuters.
Tesla saw sales declines in Europe in 2025.Photo by Brandon Bell on Getty Images · Photo by Brandon Bell on Getty Images
As poorly as Tesla ended 2025 in Europe, it has shown signs of life across numerous countries in the region since then.
Year over year, Tesla registrations in France rose 55% in February, 74% in Spain, and 32% in Norway, Reuters reported. Tesla more than doubled its sales in Portugal as registrations jumped 112%. But it wasn’t all good news for Tesla in the region.
Related: Tesla loses crucial Autopilot ruling that could cost hundreds of millions
New car registrations in Italy fell nearly 7% and were down nearly 18% in Denmark. Registrations dropped 45% in the Netherlands.
The year 2025 was the second consecutive one of falling Tesla sales on the European continent. Last year, they fell 27%, despite the company introducing newer, cheaper versions of its top-selling Model Y and Model 3 vehicles.
Tesla’s market share in the EU, Britain, and the European Free Trade Association fell to 0.8% in January, well below its 1.8% market share in 2025, 2.5% market share in 2024, and 2.9% market share the year before that.
New car registrations fell by 3.9% year over year, but the battery-electric car market share reached 19.3%, up significantly from 14.9% a year earlier, according to ACEA.
France, Germany, Belgium, and the Netherlands account for 60% of European EV sales on their own, and the results are mixed.
France and Germany saw registration gains of 52% and 24%, respectively, while Belgium and the Netherlands experienced declines of 11.5% and 35.4%, respectively.
While Tesla CEO Elon Musk thinks of his company as much more than just an electric vehicle maker, more than 90% of Tesla’s revenue comes from cars.
Still, after years of the Model S and the Model X not selling, Tesla announced earlier this month that it is mothballing them.
Even analysts are looking past the company’s struggling automotive business to the software Tesla has been developing.
“While the autos business at Tesla may underperform in 2026, we think more attention is directed towards the company’s robotaxi expansion and efforts at humanoid development,” Deutsche Bank analysts said in a recent note.
“To the extent that the macro regime doesn’t change materially, we think investors will continue to look beyond weakness in the autos business.”
Tesla’s operating income dropped dramatically in 2025 to $4.86 billion from $7.76 billion in 2024, and its gross profit declined to $16.2 billion from $17.4 billion.
Related: New Tesla vision sounds almost too good to be true
This story was originally published by TheStreet on Mar 2, 2026, where it first appeared in the Automotive section. Add TheStreet as a Preferred Source by clicking here.
