EVs are booming in Europe - but Tesla is losing market share

While automakers in the US are contending with softening sales of electric vehicles due to the Trump administration ending a tax credit that had helped boost consumer interest in EVs, car manufacturers are not facing the same challenges in the European Union.

According to new data released by the European Automobile Manufacturers' Association (ACEA), sales of fully electric vehicles surpassed those of petrol cars in the EU for the first time in December.

There were 217,898 new registrations for EV vehicles last month, which was a 51% year-over-year (YoY) increase. By comparison, there were 216,492 new petrol cars registered in December, a 19.2% YoY drop.

Hybrid-electric cars dominated the EU market, with 324,799 sales in December, representing a 5.8% YoY jump.

Electric vehicles accounted for 17.4% of the total EU market in 2025, a nearly 25% increase over 2024. Hybrid-electric vehicles made up 34.5% of the sales in the EU for the full year, while the combined sales of petrol and diesel cars fell roughly 24% to 35.5% of the market in 2025.

But while the combination of EV and hybrid-electric vehicles now account for the majority of sales in the EU, Tesla (TSLA) is starting to lose a significant amount of the market share.

Despite battery-electric vehicles surging 51% YoY in December, Tesla recorded 35,280 registrations for the month, about 20% less than the 44,190 units it sold in December 2024.

For the full year, Tesla's registrations dropped approximately 27% to 238,656 units.

And to pour salt on Tesla's falling sales numbers, Chinese EV giant BYD - which overtook Tesla as the world's largest EV manufacturer in 2025 largely due to its sales in China - is now making serious inroads in the EU market as well.

For the full year, BYD recorded 128,827 new registrations, a nearly 228% YoY surge.

Although the European Commission in December issued public proposals that reverses a ban on combustion-engine cars beginning in 2035 following pushback from the region's auto manufacturers, industry analysts expect electric vehicle sales to continue growing in Europe.

However, it remains to be seen how much market share Tesla can regain in the coming years, especially as public perception of Elon Musk factors into consumer sentiment around the company in ways it hadn't before this past year.

In fact, Tesla lost $15.4 billion in brand value in 2025, a 36% decline, according to CNBC, citing data from research and consulting firm Brand Finance.

While the firm cited a lack of new models and its relatively higher prices compared to rivals, Brand Finance CEO David Haigh said that Musk's "overreach" into geopolitics had also eroded Tesla's brand for consumers.

Tesla’s brand value was roughly $27.61 billion in Brand Finance’s 2026 ranking. That’s down from $43 billion at the start of 2025, $58.3 billion in 2024 and $66.2 billion in January 2023, which is when it reached its peak.

Meanwhile, BYD’s brand value gained about 23% to an estimated $17.29 billion, up from $14.03 billion last year, according to Brand Finance’s data.