Tesla has problem no one was pricing in

By the end of 2025, Tesla’s grip on Europe was significantly loosened. In October, the company’s sales in Europe were down nearly 49% from the previous year despite a rise in overall EV registrations, a clear sign that demand is shifting towards newer, more affordable models. Analysts now expect Tesla’s global deliveries to fall by about 7% in 2025, underscoring a broader slowdown.

Competitors are stepping in to fill the void. This year, BYD’s car sales in the EU have surpassed Tesla’s for several consecutive months. In October, BYD sold 17,470 vehicles, more than twice Tesla’s sales. Volkswagen also said its deliveries of all-electric vehicles in Europe rose 78% to 522,600 vehicles through September. A number of low-cost Chinese brands and resurgent European brands are putting pressure on Tesla’s mass-market lineup of two models.

Investors eye pricing changes, new models and market share changes in 2025Photo by South China Morning Post via Getty Images

The broader market remains strong. Research firm Rho Motion found strong EV registrations in Europe in September and October. The weather is clear; Tesla is losing home advantage in Europe and China at a time when rivals are working harder than ever to capture the future of electric vehicles.

As Tesla’s second largest market, China is not a safe haven. Retail sales at the Shanghai factory dropped to 26,006 units in October, a decrease of 35.8% from the same month last year. This dropped the company’s market share to 3%, its lowest level in three years.

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Meanwhile, Chinese competitors are growing rapidly with low prices. Xiaopeng’s new G6 is priced at 176,800 yuan, and NIO’s Onvo L60 is available for pre-sale at 219,900 yuan. Both cars are direct competitors to the Tesla Model Y.

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Model Y+ is Tesla’s answer in China. It has a range of 821 kilometers on CLTC and is priced at RMB 288,500, which is still significantly more expensive than many other options in China.

Chinese companies are also developing overseas. In November, BYD shipped more than 130,000 vehicles to other countries, breaking a record. This year, the company has outperformed Tesla in some parts of Europe.

A major competitive twist comes from Volkswagen. The automaker said developing electric vehicles in China for the Chinese market can reduce costs by up to 50% and shorten development time by about 30%, taking advantage of its expanded Hefei center and localized suppliers.

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Volkswagen’s growth in Europe is already evident, with deliveries of all-electric vehicles reaching 522,600 by the end of September. The company is also considering selling Chinese-made cars to other markets.

This seems less a question of demand for electric cars and more a question of Tesla’s ability to compete. More and more people in Europe are registering electric cars, and the number of electric cars in China continues to grow. What changes is who gets the growth and how much it costs.

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Tesla sales in Europe are declining as Chinese and European brands roll out new, cheaper models. Unless Tesla releases new models faster and lowers prices further, it won’t help much.

• Pricing: Will Tesla cut prices again in Europe or China to defend its share, and what will that mean for auto gross margins?

• New Models: A clear sign of a bullish market is the release of certain date or major updates to the Model 3 and Model Y for cars priced under $30,000.

• VW spillover: If VW sells more Chinese-made models in more places, its cost advantage could be felt outside of China and Europe.

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This article was originally published by TheStreet on December 3, 2025, and first appeared in the Automotive section. Click here to add TheStreet as your preferred source.