Musk’s Tesla disappoints Chinese customers as 2025 sales in Europe dwindles

Tesla has started 2025 with steady declines in market shares as it faces serious pressures to its business in two of its most important markets, Europe and China. 

The decline in the European market share comes as a result of CEO Elon Musk venturing into European politics and declaring support for the far-right Alternative for Germany (AfD) party ahead of its loss in the country’s elections over the weekend. 

On the other hand, it has hit bumps in the Chinese market because customers were disappointed at the rollout of the Full Self-Driving (FSD) software update.

Chinese customers underwhelmed with autopilot update

On February 25, 2025, Tesla unveiled its electric vehicles (EV) FSD software update in China. The update added city navigation features such as automatic lane changes, traffic light recognition, and a camera that monitors driver attention. 

However, the upgrade left customers disappointed as it fell short of the advanced features available in the United States. The underwhelming FSD rollout was attributed to the lack of comprehensive data on Chinese road and traffic regulations. 

To pile on the pressure, local manufacturers like BYD are challenging Tesla’s position in China, offering advanced driver-assistance systems at more affordable prices. 

Also, Huawei’s collaboration with SAIC to produce EVs equipped with Huawei’s driver-assist technology adds to the competitive pressure. These developments bring the need for Tesla to innovate continually and adapt to regional market dynamics to the fore.

European sales decline amid political controversies

In January 2025, Tesla sold only 9,000 EV units in Europe, a sharp 45% decline compared to the previous year. Meanwhile, Europeans bought about 166,000 EVs in 2024, a 37% increase on the year. 

The decline in Tesla’s market share can be partly attributed to Musk’s political engagements and professed support for the far-right party Alternative for Germany (AfD), which caused protests and alienated a segment of the EV maker’s European customer base.

Tesla’s competitors, including China’s state-owned SAIC Motor in a partnership with Audi, have filled the Tesla-shaped void to expand their presence in the region. SAIC Motor recorded about a 37% increase in sales, selling 23,000 EVs in January, making it one of the biggest benefactors of the growing EV market in Europe.

Stock performance and analyst perspectives

Tesla’s stocks has endured a 17% decline this year. Elon Musk’s role with the US government’s Department of Government Efficiency (DOGE) has become a talking point as shareholders believe it may distract his attention from his firm’s operations. 

In February 2025, the EV maker’s shares dropped to $328.50, the lowest level since November 2024. Investors are now, reevaluating their price targets. However, Dan Ives of Wedbush maintains an outperform rating with a $550 price target. The analyst cites upcoming catalysts such as new vehicle launches, advancements in autonomous technology, and the debut of Tesla’s robotaxi service in Austin, Texas for his bullish sentiment. 

As a matter of necessity, Tesla has to reevaluate its strategy in these regions given the combination of dropping sales in Europe and a more recent consumer disappointment in China. While Tesla charges about $9,000 for a limited FSD version in China, it is already lagging behind local competitors that provide more affordable and comparable performance FSD systems like Huawei, Xiaomi, and BYD.

Musk has asked Beijing for permission to extend FSD, but Tesla is unable to send vehicle data overseas due to China’s stringent data regulations. It is now looking at creating a local data center to train its AI to get around restrictions limiting it to using publicly accessible Chinese street footage. 

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