Tesla loses even more precious ground in this key region | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

The year 2025 has been a rollercoaster ride for electric vehicle maker Tesla (TSLA) .

CEO Elon Musk reached the heights of euphoria after President Donald Trump was elected and Musk was named the leader of the non-official government agency, the Department of Government Efficiency.

Investors were also happy, as direct access to the president of the United States has its perks.

However, as an unofficial member of President Trump’s cabinet, Musk was only allowed to serve in government for 130 days.

As Musk’s political ambitions failed to mesh with Tesla’s best interests and his relationship with the White House disintegrated, the reality is beginning to set in.

Tesla spent billions to build a Gigafactory in Germany as its European hub.

Image source&colon; Pleul/Pool/AFP viaGetty Images

Tesla sales slump in Europe enters its eighth month

One of Tesla’s biggest weak spots has been Europe.

While sales have fallen across the brand’s markets, including in North America and China, Europe has seen the most prolonged steady decline.

Registrations of new Tesla cars in France were down another 47.4% year over year in August, despite the overall car market growing nearly 2.2% in that time.

Registrations in Sweden fell more than 84%, despite electric vehicle sales being flat and the automaker being up 6% overall. Tesla saw a 42% drop in Denmark, and registrations fell 50% in the Netherlands, year over year.

Italy saw a less pronounced decline of 4.4%.

Tesla has deep roots in Norway, where nearly all new car sales are electric. Tesla saw a 21.3% increase in Norway, but Chinese rival BYD reported a 218% increase in registrations.

Tesla had a better time in Western Europe. Portugal reported a nearly a 30% rise in registrations, while Spain reported a 161% increase to 1,435 cars from 549 last year. BYD sales increased by more than 400% to 1,827 cars.

Tesla can blame multiple issues for the sales slump

While the U.S. remains the company’s most lucrative region, Tesla has probably reached the ceiling of what it can achieve here.

Analysts have pointed to Tesla’s aging vehicle lineup (though Tesla has promised updates for the popular Model Y later this year) and CEO Elon Musk‘s sudden foray into right-wing politics as reasons for the company’s sluggish first-quarter sales.

Tesla reported delivering 336,681 vehicles in the quarter, down from 387,000 a year ago and short of analyst expectations of 408,000.

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Electric vehicle demand in general seems to have plateaued, and while the industry continues to grow, the years of explosive growth appear to be behind us.

Tesla began seeing its U.S. market share fall in 2023 amid increased competition from traditional automakers and new startups like Rivian.

After peaking well above 50% of the U.S. EV market share in early 2023, Tesla now accounts for less than half, and it is quickly approaching the 40% mark, according to Cox Automotive.

Tesla sales in Europe were down nearly 40% from January to April compared to the previous year. In June, sales dropped another 39%. According to the European Automobile Manufacturers Association, Tesla’s first-half sales were down 44% in Europe.

Elon Musk acknowledges role he has played in Tesla’s European downfall

Earlier this year, Musk promised investors he would spend more time at Tesla HQ in Austin once his time in D.C. ended.

But since then, he has flirted with starting his own political party and spends much of his social media bandwidth commenting on government concerns.

But his political interests aren’t confined to the U.S.; Musk has also commented on the nonexistent white genocide he believes is happening in South Africa.

Musk has also 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.

Months ago, Musk seemingly acknowledged that his political activities have played a part in his company’s decline.

Musk said that any politically left-leaning buyers who abandoned the company have been replaced by people who align better with his politics.

During his second-quarter earnings call, he detailed how Tesla would win back customers.

“It’s worth noting that we do not actually yet have approval for supervised FSD in Europe. So our sales in Europe, we think, will improve significantly once we are able to give customers the same experience that they have in the U.S.,” Musk said.

So far, that prediction has not come true.