2025 hasn’t been Tesla’s year. We have witnessed a never-ending series of embarrassments, from the complete failure of the Cybertruck to the painfully bad rollout of Robotaxis, which were referred to by the public as “Swasticars” due to Musk’s previous faux “Roman salute”. And the cherry on top of this miserable cake was the consumer response — the public gave Tesla the “Roman middle finger”, also known as a boycott. That, combined with every other EV maker taking enormous leaps forward over the past year, pushed Tesla sales so low that the company is now functionally unprofitable, with only emissions credits keeping them from posting a loss. With 2026 looming on the horizon, it doesn’t appear that things will improve for Tesla anytime soon. In fact, things are about to get a whole lot worse.
Take Tesla’s European sales figures. Tesla sold just 6,600 new vehicles in Europe in July, which is a 42.4% fall from the same month last year. That is, even though overall EV sales in Europe are up significantly. This marks a seventh consecutive month of significantly declining sales for Tesla in the region, which, let’s not forget, is one of Tesla’s most important markets, especially when you consider that it will soon be the only large, Western-aligned market with pro-EV legislation.
At the same time, Tesla’s main rivals, Chinese EV makers, are making considerable gains in Europe, despite tariffs. For example, BYD sold a whopping 13,503 cars in July, a 225% increase from the same period last year. This means that Tesla’s sales drop is not leaving a vacuum that they can easily expand into later down the line. Other brands are soaking up consumers, gaining loyalty and brand recognition from Tesla’s customers.
And this is why things for Tesla are going to get so much worse in 2026 and beyond, particularly in Europe, because substantially better EVs are coming.
BYD will soon be launching EVs and chargers in Europe capable of adding 250 miles of range in just five minutes, compared to Tesla’s claimed 200 miles in 15 minutes. Also, these EVs will come with BYD’s highly praised “God’s Eye” driver’s aid system, which is arguably a better system than Tesla’s FSD, and will cost less than the equivalent Tesla. Even if, somehow, Musk manages to repair Tesla’s damaged image, they will still be forced to play catch-up.
And it isn’t just BYD. EV technology will go mainstream in Europe in 2026 and 2027, with a vast array of reasonably priced and well-specced EVs entering the market — for example, the astonishing MG IM5 and IM6, BMW’s Neue Klasse iX3, the Cupra Raval, the VW ID.2, the brilliant Mercedes CLA, the Renault 4, and the new Nissan Leaf and Micra. All of these cars offer something Tesla simply can’t, from truly affordable price tags with impressive specs to insane speeds or even just body styles Tesla doesn’t have.
To even consider competing with these cars, Tesla needs to dramatically diversify its offerings and expand its lineup, as well as significantly reduce prices or dramatically improve charge rates and ranges. Because Tesla is currently making practically no profit on each car sold, it can’t realistically cut prices any further. Not only that, but developing new technology, platforms, or models takes years and billions of dollars, and Tesla has ended and defunded all of this development to focus on self-driving.
In short, Tesla’s sales will likely continue to decline as they are pushed out of the market by better offerings, and sadly, Tesla lacks the ability to prevent this from happening.
That alone would be bad news. But there are other forces coming for Tesla too.
As I mentioned at the beginning of this article, the only thing keeping Tesla profitable is its sales of emissions credits. That scheme is being gradually phased out in the US by Trump, but it is also set to seriously shrink in Europe over the next few years. Stellantis, Toyota, Ford, Mazda, and Subaru are currently the main purchasers of Tesla’s credits. Yet these same manufacturers are making a huge transition towards EVs and hybrids over the next year or so, meaning they might not even need any of these credits soon.
In other words, Tesla’s sales are still falling, and thanks to the market leaving Tesla in the dust, things are likely to get worse, and the only lifeline keeping Tesla buoyant is about to be cut away.
That is a perfect storm.
Musk’s executives warned him of this. They told him not to abandon their gains to chase self-driving unicorns and to strengthen their EV offerings to keep their market lead. There is an alternate present where Tesla has a rate of ten minutes for 10% to 80% charging, their own LFP cells, and a genuinely diverse, affordable lineup. Tesla could have been unstoppable, even with Musk’s heinous political motives. But they weren’t. He was greedy; he ignored the experts and pushed phoney hype to manipulate the market to line his pockets, all while robbing Tesla of its future.
People accuse me of being a Tesla hater. I’m not. I was a pretty big fan for years. But like many, I can see what Tesla could have become and can see how Musk is actively killing it with his poison politics and horrific mismanagement. Watching Tesla fall is gratifying, yet sad at the same time.
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Sources: The Times, Barrons, Money Wise, CNN, What Car, Carbon Credits, EV Powered, Will Lockett, Will Lockett