Tesla has taken decisive action to counter a significant downturn in its European sales, launching a lower-priced version of its Model 3 sedan across the continent. The move comes as the electric vehicle (EV) pioneer grapples with a potent mix of weakening consumer demand, intense competition from China, and a growing backlash against the political activities of its chief executive, Elon Musk.
Price Cuts and Political Headwinds
The newly introduced Model 3 Standard is now listed at €37,970 in Germany, 330,056 Norwegian kroner, and 449,990 Swedish kronor. This strategy mirrors a similar price reduction for the Model Y SUV, Tesla's best-selling model, in both Europe and the United States. Musk has publicly stated that this more affordable option, first launched in the US in October, is designed to "reignite demand by appealing to a broader range of buyers."
However, Tesla's challenges extend beyond pricing. Sales across the European Union have been notably impacted by a consumer backlash against Musk's vocal support for Donald Trump's election campaign and his subsequent work within the former president's administration. As head of the so-called Department of Government Efficiency (Doge), the billionaire oversaw extensive job cuts before resigning in May following a disagreement over fiscal policy.
Competition and Controversy Mount
Further alienating potential customers, Musk has made several other controversial political interventions. These include appearing to give a Nazi salute at a Trump rally, expressing support for Germany's far-right AfD party, and accusing UK Labour leader Keir Starmer and other senior politicians of covering up grooming gang scandals. This has created a reputational storm coinciding with a fierce market challenge.
Tesla's sales have slumped across Europe as it faces increasingly tough competition from its Chinese rival BYD. In a landmark shift, BYD outsold the American EV maker across the region for the first time this past spring, signalling a major shift in the competitive landscape.
Broader EV Market Under Pressure
The headwinds are not unique to Tesla. The broader electric car market is showing signs of strain. In the UK, EV sales grew at their slowest rate in two years this November, at just 3.6%, according to the Society of Motor Manufacturers and Traders (SMMT). Critics argue that new taxes announced in the recent budget could further undermine demand.
From April 2028, a new pay-per-mile road tax for EVs will charge drivers 3p for every mile, costing motorists an average of £250 a year. Mike Hawes, chief executive of the SMMT, warned: "[This] should be seen as a wake-up call that a sustained increase in demand for EVs cannot be taken for granted. We should be taking every opportunity to encourage drivers to make the switch, not punishing them for doing so."
Tesla's aggressive pricing strategy is a clear attempt to stabilise its position in a critical market. Yet, with political controversy denting its brand image and regulatory support wavering, the road to recovery in Europe appears increasingly complex.
