TLDR
- Tesla sales dropped 13% in Q2 2025 to 143,535 vehicles, with market share falling to 46.2%
- Used Tesla EVs selling for 55% of original price, creating competition for new car sales
- European sales decline continues for eighth month, with drops of 47% in France and 84% in Sweden
- Federal EV tax credit ending in September will make new EVs more expensive
- Tesla faces mounting competition from Chinese rivals like BYD and traditional automakers
Tesla’s sales challenges are deepening as the electric vehicle maker faces pressure from multiple directions. The company’s second quarter performance showed a 13% drop in sales to 143,535 vehicles.
This decline reduced Tesla’s market share to 46.2%, down 3.5 percentage points from the previous year. The broader U.S. EV market also contracted, with total sales falling 6% to 310,839 vehicles.
The used car market presents a major headwind for Tesla and other EV manufacturers. Late-model used battery electric vehicles can be purchased for about 55% of their original sticker price. This compares to internal combustion engine cars, which retain closer to 75% of their value.
A 2022 dual-motor long-range Model Y originally priced at $50,000 can now be found for $25,000 to $30,000 on car-buying platforms. This 45% discount makes used EVs a more attractive option than new vehicles.
The federal EV tax credit of $7,500 ends in September. This creates urgency for buyers to purchase before October 1, when EVs will become more expensive.
After the credit disappears, new EV sales could face additional pressure. Buyers may increasingly turn to the used market for better deals.
European Markets Show Deeper Struggles
Tesla’s European performance tells an even more concerning story. The sales decline has extended to an eighth consecutive month across key markets.
France reported a 47% drop in Tesla registrations for August compared to the same month in 2024. Sweden saw an even steeper decline of 84% during the same period.
Denmark recorded a 42% fall in Tesla registrations. Norway remained the lone bright spot with a 21% increase, though Chinese rival BYD surged 218% in that market.
The revamped Model Y launched in June has failed to reverse the downward trend. Model Y sales fell 46% in Denmark and 87% in Sweden during August.
Meet the New Model Y Performance
Designed to deliver performance that’s just as good on your daily drive as it is on the open road
Vehicle exterior upgrades for even better performance
– New front + rear fascia & carbon spoiler for better aerodynamics
– Optimized wheels &… pic.twitter.com/Ox8YkRDpVX
— Tesla Europe & Middle East (@teslaeurope) August 29, 2025
Competition from Chinese manufacturers and traditional automakers has intensified. Tesla’s aging product lineup hasn’t seen a new mass-market model since the Model Y debuted in 2020.
CEO Elon Musk’s political activities have created additional challenges. Over half of consumers surveyed by Electrifying.com said Musk’s influence puts them off buying a Tesla.
Financial Impact on Automakers
Ford Motor’s EV division lost $1.3 billion in the second quarter, equivalent to roughly $22,000 per car sold. This highlights the profitability challenges facing EV manufacturers.
For traditional automakers like Ford and General Motors, selling fewer EVs may actually improve margins. These companies generate higher profits from internal combustion vehicles.
Tesla has sold 2.4 million EVs in the U.S. since 2021, representing 55% of total American EV purchases. Despite current challenges, the company remains the dominant U.S. EV seller.
RBC analyst Tom Narayan maintains a Buy rating on Tesla with a $325 price target. He believes most of Tesla’s value comes from artificial intelligence initiatives rather than car sales.
Tesla launched a robotaxi service in Austin, Texas in June. The company plans to begin selling humanoid robots in 2026.
Used Tesla prices have hit new lows following aggressive price cuts that began in 2023. Used Model Y prices dropped 41% between July 2023 and July 2024 in the UK.
Used Tesla sales in the UK jumped 270% in July, reaching record levels. The combination of low used car prices and ending federal incentives creates a challenging environment for new Tesla sales.
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