Tesla, Inc. (TSLA) experienced a significant decline in its European vehicle registrations in 2025, dropping by 27% to a total of 238,656 units. This decline marks a troubling trend for the electric vehicle (EV) giant as its competitor, the Chinese automaker BYD, achieved remarkable growth, with registrations skyrocketing by 268.6% to 187,657 units.
December 2025 proved particularly challenging for Tesla, as its registrations fell 20% year-over-year to 35,280 units. In stark contrast, BYD”s December figures more than tripled, reaching 27,678 units. Although Tesla still outsold BYD in absolute numbers, the narrowing gap indicates an intensifying competitive landscape.
BYD”s market share surged from 0.4% in 2024 to 1.4% in 2025, driven by its competitively priced lineup of electric and hybrid vehicles. This increased competition poses a significant challenge not only for Tesla but also for established European automakers like Volkswagen.
Adding to Tesla”s challenges is the impact of CEO Elon Musk”s political involvement, particularly with the Trump administration, which has reportedly affected buyer sentiment in crucial European markets. Globally, Tesla saw a 9% decline in sales for 2025, with a notable 16% drop in the fourth quarter compared to the previous year, resulting in BYD overtaking Tesla as the world”s leading EV manufacturer.
In an effort to adapt to the evolving market, Tesla announced a shift in its Full Self-Driving offering, transitioning to a subscription model after February 14. This change will eliminate the one-time purchase option, previously priced at $8,000, in favor of a monthly subscription fee of $99. The move aims to boost recurring revenue amidst increasing competition from both Chinese and European rivals.
On a broader scale, the European electric vehicle market showed promising growth in December 2025. Sales of battery-electric vehicles increased by 51% year-over-year, while plug-in hybrid models rose nearly 37%. Overall, battery-electric cars captured 17.4% of the EU market share, up from 13.6% in 2024. The popularity of hybrid-electric vehicles was apparent, accounting for 34.5% of the market.
As the combined market share of petrol and diesel vehicles fell to 35.5% from 45.2% in 2024, the trend reflects a significant consumer shift towards electrified options. Total passenger-car registrations in the EU rose by 5.8% in December, with Germany seeing a 9.7% increase while Italy recorded a 2.3% rise, contrasting with a 5.8% decline in France.
With BYD”s notable growth and Tesla”s declining registrations, the dynamics of the European electric vehicle market are evolving rapidly, highlighting the need for ongoing adaptation and innovation in the industry.
