Model Y upgrade difficulty does not save the day! Tesla, Inc. (TSLA.US) European sales drop for the seventh consecutive time.

Despite significant improvements to the iconic and globally popular Model Y, electric car leader Tesla, Inc. (TSLA.US) saw a major decline in new car registrations in several key European markets in July. The American electric car manufacturer is struggling to address CEO Elon Musk's radical political stance in Europe, challenges in autonomous driving regulations, and increasingly intense competition in the electric car market. Tesla, Inc.'s aging lineup of electric cars in Europe is facing competition from a wave of low-cost electric car competitors, especially from new generation electric car rivals from China. The company is launching an updated Model Y and starting production of a cheaper new model, but the production volume of this model will not significantly increase until the next quarter, later than originally expected. Official industry registration data in Europe shows that Tesla, Inc.'s brand registrations (which are closely related to sales) continue to decline in Europe, with significant year-on-year drops in July: registrations dropped by 86% to 163 units in the Swedish market, by 52% to 336 units in Denmark, by 27% to 1,307 units in France, and by 62% to 443 units in the Netherlands. These countries, which have traditionally had the strongest demand for cars in Europe, have seen Tesla, Inc.'s electric car registrations decline for seven consecutive months. In the first six months of this year, Tesla, Inc.'s sales in the European market decreased by over one-third year-on-year. However, the trends in electric car registrations in Norway and Spain are opposite to those in the above-mentioned countries, with Tesla, Inc.'s registrations in July increasing by 83% and 27% to 838 units and 702 units respectively. In Spain, the total sales of electrified vehicles (including pure electric or plug-in hybrid systems) surged by 155%. Additionally, one of Tesla, Inc.'s strongest competitors in China, BYD Company Limited, sold as many as 2,158 units in Spain, nearly eight times the number sold in July 2024. A multi-bar graph shows the changes in sales of pure electric cars by Tesla, Inc. in selected European markets in July and the first seven months of this year, as well as the sales and market share of Tesla, Inc.'s pure electric cars in the EU from January 2024 to June 2025. It is expected that Tesla, Inc. will not introduce more affordable entry-level electric car models in the last three months of this year, as the $7,500 tax credit for car purchases in the US is set to expire soon. Musk admitted in July that Tesla, Inc. may face "several very difficult quarters". He mentioned that the exceptionally strict regulations on autonomous driving in Europe make it difficult for Model Y to grow sales in some countries and promote the subscription of the FSD fully autonomous driving service. In the European market, the optional supervised autonomous driving system for Tesla, Inc.'s Model Y is a "major selling point". "We believe that once European customers can enjoy a driving experience almost identical to that in the US market, our sales in Europe will see a significant improvement," Musk told analysts at the earnings conference. In March 2025, Tesla, Inc. began selling the long-range all-wheel-drive version of the updated Model Y in Europe, with two rear-wheel drive versions going on sale in May. Statistics show that in just July, registrations for Model Y in Sweden and Denmark dropped by 88% and 49% respectively, but surged by over four times to 715 units in Norway. In Norway, where almost all new cars are electric and Tesla, Inc. has been the best-selling brand since 2021, the introduction of a 0% interest rate loan in May stimulated a significant increase in orders for this model. In June, Tesla, Inc. launched a pilot Robotaxi rental service in Austin, Texas, using about ten Model Y SUVs controlled by its autonomous driving software. However, the progress in promoting its autonomous driving features in other regions of the US continues to be hindered as the required regulatory approvals have not been obtained. Industry statistics show that in July, overall car sales in Denmark increased by 20%, by 6% in Sweden, by 48% in Norway, by 17% in Spain, by 9% in the Netherlands, and decreased by 8% in the French market. Other European countries are expected to release July car sales data later on Friday. European car manufacturers Volkswagen, Mercedes-Benz, Stellantis, Renault, and BMW all reported weaker-than-expected second-quarter performance, warning of pressure from US import tariffs and continued slowing demand.