Tesla is facing sales declines in Europe and China, a drop in used vehicle value, and public backlash over CEO Elon Musk’s actions. Growing discomfort among consumers—paired with a saturated EV market—has started to erode Tesla’s stronghold in the electric vehicle space.
Tesla is experiencing growing challenges on multiple fronts, including new car sales and public perception, as well as the declining value of its used vehicles. Once popular among environmentally conscious buyers, the brand is now dealing with shifting sentiment that is impacting its market position.
In past years, Tesla saw intense demand for its cars. Customers paid deposits and waited months—sometimes years—for a Model 3. Some even paid markups to skip the queue. But that enthusiasm appears to be cooling.
Sales drop and sentiment changes
Tesla’s new car sales have fallen sharply in Europe, and to a lesser extent in China. While the European downturn is partly tied to political perception, in China, stronger competition from local automakers and a limited model lineup have had more influence.
In the US, Tesla’s image has also taken a hit. Some drivers say the brand is no longer seen in the same light, and for some, owning a Tesla now comes with unwanted attention. One owner, speaking to The New York Times, described being insulted in a parking lot. Others have cited political concerns as the reason for selling their vehicles.
Still, cars are major financial commitments, and many Tesla owners are not in a position to sell—even as used prices continue to drop. And despite earlier statements from Tesla’s CEO suggesting the vehicles might appreciate over time, the opposite appears to be happening.
Used Tesla values declining faster than the market
Used Tesla prices are falling more quickly than those of other brands. According to CarGurus data, Tesla vehicles saw an average price drop of 3.7% over the past 90 days, compared to 1.5% across the broader used car market. On a year-over-year basis, Tesla prices are down 7.5%, compared to a 2.8% decline across all used vehicles.
This drop comes after multiple price cuts on new Teslas and large-scale sell-offs by rental fleets, which have added to supply and further driven down prices.
The Model 3, which has been available longer than the Model Y, has seen especially steep declines. A 2017 Model 3 now averages just under $20,000. Even newer models have not held value well—a 2022 Model 3 averages around $25,000.
The Model Y, although newer and originally priced higher, has also seen significant depreciation. CarGurus reports year-over-year price drops ranging from 16% to 21% depending on the model year.
These figures are echoed by data from iSeeCars, which shows used Teslas dropping 13.6% in value over the past year. The Models 3, Y, and S are among the top EVs for depreciation, along with the Porsche Taycan.
Growing competition from Chinese EV manufacturers
As Tesla works to navigate slowing sales and shifting consumer sentiment, competition from Chinese automakers continues to build momentum—particularly in markets like Europe and Southeast Asia.
Companies such as BYD, NIO, and XPeng have been expanding globally with affordable pricing, fresh designs, and increasingly advanced tech. BYD, which overtook Tesla in global EV deliveries last year, is pushing into overseas markets with plans to double international sales to 800,000 vehicles by 2025. It’s also building new manufacturing plants in Brazil, Thailand, Turkey, and Hungary to support that growth.
Models like the BYD Dolphin offer competitive range and pricing, making them appealing alternatives to cost-conscious buyers. Meanwhile, XPeng and NIO are targeting tech-savvy consumers with features like autonomous driving and battery-swapping technology.
Chinese EVs are gaining traction in Europe too, where some consumers are seeking alternatives to Tesla amid concerns over the brand’s shifting image. Industry analysts have noted that China’s growing footprint in the EV space is not just about volume but also about rapid innovation and strategic expansion—especially as some Chinese brands avoid US tariffs by building closer to their target markets.
For Tesla, these developments raise the stakes in an increasingly crowded field. As the company faces pricing pressure and fluctuating demand, the rise of well-capitalised, tech-forward Chinese EV brands adds another challenge to maintaining its global market share.
Tesla has been making efforts to bolster its public image, including recent appearances involving political figures. Earlier this week, President Trump promoted Tesla vehicles at the White House, despite having previously criticised electric vehicles during his campaign. Reports suggest he may have purchased a Tesla himself, signalling a shift in stance—or at least a moment of support for the brand.
Frustration extends to Starlink users
Tesla isn’t the only Elon Musk-led venture experiencing turbulence. Starlink, the satellite internet service operated by SpaceX, has also seen pushback from some subscribers. While user numbers are growing, some customers in the UK and beyond say Musk’s political affiliations and public remarks have prompted them to reconsider the service.
In rural areas with limited broadband options, Starlink remains a crucial tool. But its association with Musk has sparked debate. Some customers say they’re stuck with the service for lack of alternatives, while others are eyeing new players like OneWeb and Viasat, which are in talks with European governments to provide similar coverage.
As public perception of Musk evolves, so too does the reputational impact on his companies. For Tesla, the challenge isn’t just about pricing or competition—it’s about navigating a broader shift in how the brand, and its CEO, are viewed in a rapidly changing market.
