Tesla Losing Steam in Europe: What's Impeding Its Growth?

Tesla’s TSLA car sales dropped significantly in several European countries in May, which marks the fifth straight month of declines. This downturn has been attributed to CEO Elon Musk’s political controversies and an aging vehicle lineup.Sweden and Portugal saw some of the steepest declines, where Tesla’s new car sales fell 53.7% and 68% year over year, respectively. However, overall EV sales in those countries increased by about 25%. Tesla sales also fell 30.5% in Denmark, 36% in the Netherlands, 19% in Spain and 67% in France, according to recent data.However, Norway stood out as an exception where Tesla sales soared 213% in May, thanks to the introduction of updated Model Y SUVs. Sales of both new and previous versions of the Model Y surged to 2,346 units from 690 in May 2024.Although the new Model Y is already available for order in many European markets, deliveries of the most affordable variant, historically Tesla’s top seller, are only expected to begin this month in countries like Germany, the United Kingdom, France and Italy. As a result, the number of orders in May has yet to show up in sales data.To stimulate demand, TSLA has been offering various financial incentives in Sweden, Germany, Britain and France. It is also offering interest-free loans for the new Model Y in Norway. Tesla has been facing tough competition from local and Chinese auto makers in Europe. TSLA carries a Zacks Rank #5 (Strong Sell) at present.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.In Europe, total sales of BYD Company Limited BYDDY, a Chinese EV maker, surged 359% year over year in April. BYD surpassed Teslain EV sales in Europe for the first time in April, overtaking the long-time market leader in the region. Per Jato Dynamics, BYD registered 7,231 new battery-electric vehicles in April, up 169% from the same time last year, earning it a spot among the top 10 EV brands in Europe. Tesla registered a drop of 49%, placing it one spot back. In April, Volkswagen AG VWAGY, a German auto manufacturer, gained 1.1% market share in Europe. It led the European EV market in April 2025. Volkswagen’s subsidiaries, Skoda and Audi, also saw notable growth in the battery electric vehicle segment. The Skoda Elroq emerged as the top-selling all-electric model in Europe in April, validating the brand’s strategy to introduce the SUV-sized Elroq in the niche between the B and C segments. The Elroq was followed by Volkswagen’s ID3, ID7 and ID4 models.Tesla’s Price Performance, Valuation and EstimatesTesla has underperformed the Zacks Automotive – Domestic industry and the Auto, Tires and Truck sector year to date. Tesla has lost 15.1% compared with the industry and sector’s decline of 14.2% and 9.6%, respectively.YTD Price PerformanceImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for 2025 and 2026 EPS has moved down 13 cents and 16 cents, respectively, in the past 30 days.Image Source: Zacks Investment ResearchFrom a valuation perspective, Tesla appears overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 10.56, higher than its industry’s 2.77.Image Source: Zacks Investment ResearchZacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tesla, Inc. (TSLA): Free Stock Analysis Report Volkswagen AG Unsponsored ADR (VWAGY): Free Stock Analysis Report Byd Co., Ltd. (BYDDY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks