Europe's 2025 EV Upheaval: Tesla Under Pressure, Volkswagen Charges Ahead, Chinese Automakers Eye Opportunity
- Maya
- Apr 15
- 11 min read
Updated: 6 days ago
Recently, anti-Tesla activities in Europe have been in full swing, causing many to worry about Tesla's future. Amid Tesla's struggles, Volkswagen has seized the opportunity to gain significant market share.
In the first quarter of 2025, Volkswagen sold 216,800 pure electric vehicles, a 59% increase compared to the same period last year. Among these, 158,100 units were delivered in the European market, with a staggering year-on-year growth rate of 112.6%. This surge propelled Volkswagen's overall sales to 2.13 million units, maintaining a 1.4% growth momentum.
In contrast, Tesla's performance has been less than stellar. According to available data, Tesla's sales in 31 European countries plummeted by 45% in January and February 2025, with only 26,619 units sold. In March, sales in several European markets dropped by over 60%. For the entire first quarter, Tesla's global sales reached 336,700 units, with the decline accelerating to 13%.
The first-quarter sales performance of Volkswagen and Tesla seems to reflect a reversal of roles. Tesla's once-dominant position appears to be weakening, while Volkswagen is making significant gains.
Behind the intense competition between Tesla and Volkswagen in Europe, there is another important development worth noting. The tariff barriers that the EU has long imposed on Chinese electric vehicles appear to be easing, offering new hope for Chinese new energy brands and boosting the confidence of Chinese automakers already operating in Europe.
In 2024, the growth rate of China's auto exports to the EU slowed significantly, with a mere 4% increase. Pure electric vehicles (PEVs) faced a "winter," with exports falling by 10% to 570,000 units.
Despite the tariff barriers that have hindered the entry of Chinese new energy vehicle manufacturers into the European market, Chinese brands have not given up on their ambitions for Europe. By the end of 2024, at least 20 Chinese automakers had successfully entered the European market, opening over 600 stores across Europe. Their presence extends beyond Western Europe, with initial forays into Eastern European markets.
New energy vehicle startups like Lynk & Co and XPeng have been particularly active. Lynk & Co began entering the European market in 2020 through a subscription model and by the end of 2024, had established nearly 30 sales outlets covering 22 European countries. XPeng Motors has launched its models in at least 11 countries, including Norway, Denmark, Germany, France, and Finland.
BYD, which has been in Europe for over 20 years, had already reached 230 stores in Europe by 2023. SAIC's MG brand has also been performing strongly, entering 28 European countries by 2023 with over 830 service outlets. Other brands like LEAPMOTOR and NIO, which have attracted significant attention from overseas investors, are also making progress. LEAPMOTOR's overseas channel development is steadily advancing, and its cooperation with Stellantis is expected to unleash greater potential. By April 2024, NIO had already opened about 30 stores in Europe.
Although European automakers like Volkswagen have seen a boost in their pure electric vehicle business in the first quarter of 2025, the market is highly unpredictable, and policies can change rapidly. This advantage may not last long.
The Decline of the Champion
Over the past six months, Musk has been deeply involved in the political arena, pursuing his political aspirations. This has significantly eroded the goodwill and trust that European consumers had for Tesla.
The most vocal reactions have come from European and American consumers, who have not only voiced their complaints but have also taken concrete actions to express their dissatisfaction, with Tesla becoming a key target of these protests.
The impact of this backlash can be seen in the February European electric vehicle sales rankings published by CleanTechnica. Although the Model Y reclaimed the monthly registration champion title in February, its sales fell by a staggering 56% compared to the same period last year. The Model 3 also saw a 13% decline in sales.
According to Electrek's data, Tesla's overall delivery volume in Europe in the first quarter of 2025 decreased by 37% year-on-year. Except for the UK market, which saw a 6% increase in deliveries, Tesla's delivery volumes in major European countries such as Germany and Switzerland all fell to varying degrees, with declines exceeding 62% in these two countries.
In 2024, after multiple countries canceled electric vehicle subsidies, the market was sluggish. However, in January and February 2025, the market saw a 31% increase, showing a promising trend. In contrast, Tesla's sales in Europe continued to decline over the first three months of the year, forming a stark contrast to the overall growth trend in the European market.
Overseas media have attributed Tesla's setbacks in the European market to Musk's excessive involvement in politics.
In recent months, comments such as "self-inflicted," "the board should really oust Musk," and "Musk has gone off the deep end" have frequently appeared in media reports, with public dissatisfaction with Musk reaching a high level.
Behind this may also lie the nature of Tesla's target customer base.
Amid the recent impacts of U.S. tariff policies, European consumers have found themselves in a difficult position and have naturally vented some of their frustrations on Musk, given his previous closeness to Trump.
In addition to the public relations challenges, the slow update cycle of Tesla's product lineup is another significant factor contributing to its falling sales in Europe.
A frequently discussed topic is that Tesla has not launched a new model for the mainstream market in six years.
Take the Cybertruck, for example. Its unique design and pricing strategy have made it difficult for the vehicle to gain widespread market acceptance. Meanwhile, other pure electric models have been emerging like mushrooms after rain, challenging the Model 3/Y in terms of both product capabilities and the variety of options available.
Looking at the top sellers in the European electric vehicle market in January and February, the list includes the Model Y, ID.4, Skoda Enyaq, ID.7/3, Kia EV6, Renault 5, and Model 3. None of these models have a large and unconventional body like the Cybertruck.
On the contrary, European consumers are well-known for their preference for small and agile vehicles.
However, there is some good news. According to information disclosed during Tesla's earnings call, the Model Q, priced at $25,000, is expected to hit the market in the first half of this year. Recently, some spy photos of the Model Q have also surfaced online.
Given Tesla's leading position in the global electric vehicle market, the biggest uncertainty affecting the future market performance of the Model Q may not be the vehicle's performance itself, but rather the extent of Musk's continued involvement in politics.
Recalling the past, when Trump initiated the tariff war, Musk had strongly opposed it, even calling the tariff war's orchestrator, Navarro, an "idiot" and "dumber than a bag of hammers." At that time, it seemed that Musk was going to distance himself from Trump and return to the business realm.
However, just last Saturday, on April 13th, Musk made a high-profile appearance, attending the UFC 314 event in Florida with Trump. This move undoubtedly sent a signal to the outside world that their relationship remains close. Moreover, Navarro appeared on a TV show to "smooth things over," stating that "Elon is doing well" and denying any conflict between Musk and Trump over the tariff issue.
Musk has always been unpredictable. What will he do next?
Volkswagen's "Opportunistic Gain"
So, who has been benefiting from the orders that Tesla has lost in the European market? It appears that Volkswagen is the biggest winner.
In January and February 2025, the top two spots on the European electric vehicle best-seller list were consistently held by the Tesla Model Y and the Volkswagen ID.4. In January, the Volkswagen ID.4 broke the norm and successfully overtook the Model Y to claim the championship title. In February, the ID.4 maintained its strong performance, while the Volkswagen ID.7 ranked third.
During these two months, the sales of the Tesla Model Y continued to decline, with drops of 49% and 56% in January and February, respectively. The Model 3 also experienced similar declines, with sales falling by over 40% and 13% in these two months, respectively. The continuous decline in Tesla's sales directly led to significant increases in the sales of other models, including the Renault 5 and the Volkswagen ID.4.
The Volkswagen ID.4 achieved an impressive 144% year-on-year growth in February.
Clearly, pure electric SUVs like the Volkswagen ID.4 and the Renault 5 have taken advantage of Tesla's public relations troubles and its shrinking market share to quickly seize the market and fill the void left by Tesla, achieving a sales comeback.
The Volkswagen ID.4's ability to stand out in this competition and capture the temporarily vacant market is closely related to its own product advantages.
The Volkswagen ID.4, with its spacious interior, chassis tuning that meets European driving preferences, and annual upgrades in range and thermal management systems that are suitable for European climates, has shown strong vitality since its delivery in the first quarter of 2021, when it became the best-selling model in the European market.
More importantly, the Volkswagen ID.4 has accurately positioned market demand and filled the gap for European families' urgent need for practical pure electric SUVs. Compared to the Tesla Model Y, the starting prices of the various versions of the Volkswagen ID.4 in the European market are relatively affordable, fluctuating around 40,000 euros, which is within the budget range of mainstream European families.
The 2025 Volkswagen ID.4, after upgrading key performance aspects such as power and range, has a starting price of €40,335 (approximately RMB 330,360). Moreover, Volkswagen recently announced a consumer-friendly policy, offering free home charging or a certain amount of free charging credits to customers.
In contrast, the Tesla Model Y has a relatively higher starting price in the European market, fluctuating around €45,000, which exceeds the budget of many European families.
Due to obstacles encountered by Tesla's Berlin factory during its capacity expansion, new car production has not reached the expected target, and delivery cycles have been extended. As a European-based company, Volkswagen does not face such concerns.
Of course, in addition to product and local advantages, policy factors have also played a significant role.
On April 1st, the European Commission announced an important decision to relax automobile carbon emission rules. Specifically, from 2025 to 2027, companies' average emission levels will be assessed to determine whether they meet carbon emission standards.
The introduction of this new regulation not only provides European automakers with some breathing room but also encourages multiple companies to invest heavily in launching various new models to seize market opportunities. For European consumers, who have always been committed to environmental protection, this also has a certain demand-pushing effect.
It can be said that Volkswagen has taken advantage of favorable timing, location, and people's support, leveraging its own strengths to seize this rare opportunity and achieve a leap in sales.
Volkswagen is very satisfied with the excellent performance of its pure electric vehicle business in the first quarter. Volkswagen Group CEO Oliver Blume, in an interview with Bild am Sonntag, referred to Volkswagen as the "clear leader in the European electric vehicle market" and stated that the company needs to "speed up and enter the fast lane."
In addition to its own efforts, Blume also hopes that the German government will take corresponding measures, saying, "We urgently need clear political impetus to consolidate Germany's industrial position."
However, the reality is that before the German government's subsidy policy is implemented, Chinese automakers may take the lead in making a strong push into the European market.
Chinese Automakers Are Watching Closely
Last year, the EU's imposition of additional tariffs on Chinese electric vehicles attracted widespread attention and discussion. This policy directly led to a significant decline in China's electric vehicle exports to Europe in 2024. However, just eight days after Trump initiated the highly publicized tariff war, a turning point emerged.
On April 10th, Handelsblatt reported that China and the EU have begun negotiations to cancel the EU's tariffs on Chinese electric vehicles. Both sides have agreed to set a minimum price for Chinese-made electric vehicles, and the European Commission is willing to continue negotiating alternative tariff solutions with China.
The release of these positive signals has undoubtedly opened a door of hope for Chinese new energy brands to enter the European market, bringing many benefits.
In fact, even during the difficult period when exports were hindered by high tariffs, some Chinese brands never stopped their pace of market expansion in Europe and continued to advance steadily.
For example, BYD received 6,480 orders in the UK, 1,787 in Italy, and 1,626 in Spain in March. BYD's factory in Hungary is also scheduled to start production this year.
Looking at SAIC Group, according to the European Automobile Manufacturers' Association's 2024 European automotive market sales data, SAIC Group outperformed many competitors, achieving an excellent result of 244,600 units sold and becoming the champion of Chinese automakers in Europe. Among them, SAIC's MG brand was particularly outstanding, delivering 243,400 vehicles in Europe in 2024 alone.
Even under the additional tariffs, Cyberster sold over 3,000 units in Europe from October last year to the present.
Moreover, in the current situation where the results of the Sino-European tariff negotiations have not yet been revealed and new policies have not been implemented, MG has stated that it will increase the deployment of hybrid and plug-in hybrid vehicles in Europe.
In addition to MG, new energy vehicle startups from China such as Lynk & Co, Zeekr, and ZeroRun plan to further expand into the European market in 2025, including opening more stores, introducing new models, and increasing the penetration rate of "subscription-based" models. NIO's Firefly, which was originally designed for the European market, is also eyeing opportunities there.
It is easy to imagine that once the Sino-European negotiations achieve a breakthrough and the EU eases restrictions on Chinese pure electric vehicles entering the European market, Chinese new energy vehicle manufacturers, with the reputation accumulated by well-known brands like BYD and MG, as well as the momentum and innovative spirit of new force automakers like Lynk & Co, Zeekr, and ZeroRun, will pose a significant threat to the sales of European automakers' pure electric vehicles.
In 2024, despite the restrictions on pure electric vehicle exports to Europe, BYD and XPeng Motors still achieved sales growth of 216% and 304%, respectively. BYD sold 50,265 units, surpassing the total sales of Alfa Romeo and Subaru in Europe.
Along with the increasing popularity of Chinese new energy vehicles, there has also been progress in the construction of sales and service networks.
More importantly, the construction of local factories in Europe, such as BYD's factory in Hungary and ZeroRun's international factory in Europe, can further reduce the pricing of Chinese new energy vehicles in Europe, demonstrating even greater competitiveness.
For ordinary consumers, beyond stereotypes, there is a greater desire to test-drive or own a relatively affordable, intelligent, and powerful vehicle.
If the Sino-European negotiations go smoothly, it will be hard to say whether it is good news for European automakers—whose sales of traditional fuel vehicles in China are declining, and whose new energy vehicles are struggling to gain a foothold in the Chinese market. To put it more bluntly, the "external threat" has not been resolved, and the "internal trouble" is already on the way.
Regardless of Volkswagen's doubled quarterly sales in Europe or other European automakers, their pure electric vehicle business in Europe is not solidly established. The potential of Tesla and Chinese new energy brands hangs over European automakers like the Sword of Damocles.
Their response measures include the new platforms that will be launched in the next two years, such as Volkswagen's PPE, Mercedes-Benz's MMA, and BMW's Neue Klasse, combined with cooperation with technology companies to close the gap with competitors in basic capabilities and ensure their own advantages.
Even as it emerges from the painful period of adjustment, Volkswagen has not given up on launching new products in the fiercely competitive Chinese market.
The upcoming Shanghai Auto Show will see Volkswagen unveiling three new models: a Class B extended-range SUV, a pure electric SUV, and a pure electric sedan. The smaller and more affordable ID.1 will not be launched until 2027 and is expected to become a new sales driver at that time.
Volkswagen's electric vehicle journey in 2025, to some extent, reflects the new normal for European automakers: finding new growth curves between the continuous influx of outsiders in the domestic market and the emerging challengers in overseas markets.
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