Tesla lost again in Europe to China's BYD. A reason for investors to think twice?

Tesla is losing ground in Europe: sales of electric cars in August collapsed by 37%, while China's BYD more than tripled them and overtook its American rival for the second month in a row. The fall in Tesla's results raises doubts about its sustainability, especially against the background of political and image risks associated with Elon Musk, says Barron's. The company's shares fell almost 3.5% in trading on September 25, while BYD's depositary receipts jumped 2.5%.

Tesla managed to sell 37% fewer electric cars in the EU in August than a year earlier - only 8,220 units, the European Automobile Manufacturers Association (ACEA) reported on September 25, while Chinese electric car maker BYD increased new car sales by 201% to 9,130 units over the same period. This is the eighth consecutive month when Tesla's performance in the region has fallen, and the second month when ACEA statistics record the advantage of the Chinese company over the U.S., notes Reuters.

Tesla shares fell 3.4% in New York trading. BYD depositary receipts jumped by 2.5%.

If the UK, Norway and other European Free Trade Association (EFTA) countries are taken into account, Elon Musk's company is still ahead of its Chinese rival: 14,831 cars sold versus 11,455. However, even here Tesla's sales fell by 22% year-on-year, while BYD's sales increased by 216%.

Since the beginning of the year, Tesla's sales in the EU and EFTA amounted to 133,857 cars, down 33% from the same period in 2024. BYD's result was 95,940 cars, an increase of 280%.

That BYD, until recently a local Chinese player, is steadily outpacing Tesla in Europe, a key electric vehicle market, is a signal of a redistribution of forces in the global EV industry, Barron's notes . Falling sales are undermining Musk's position and reducing its share. Tesla previously attributed the weak results in the region to production schedule disruptions related to the modernization of assembly lines for its key Model Y model - to produce its updated version. However, the decline continued afterwards.

Overall, 2025 turned out to be a difficult year for Tesla, emphasizes Barron's. Worldwide, the company sold 721,000 electric cars in the first half of the year - 13% less than a year earlier. At the end of the third quarter, Wall Street analysts expect deliveries of 447,000 cars, which is 3% lower than in the third quarter of 2024.

Tesla needs to maintain high profitability, otherwise investors will start to doubt its valuation, Markets.com notes. The company's prospects are primarily related to entering emerging markets, where demand for electric vehicles is growing rapidly, as well as continuing to invest in innovation and sustainability. A focus on green energy, improved operational efficiency and lower production costs could strengthen the company's competitive position and support its long-term growth, the publication said.

According to TipRanks, Tesla shares have mixed ratings from Wall Street analysts: although the company has 15 buy recommendations, 12 analysts advise holding its securities in the portfolio, while eight suggest selling. At that, the average target price is set at $329.8, which implies the quotations decrease by a quarter relative to the current level.

This article was AI-translated and verified by a human editor