The European electric vehicle market is witnessing a significant shift in competitive dynamics, as new data reveals a stark divergence in the fortunes of leading manufacturers. According to figures released by the European Automobile Manufacturers' Association (ACEA), Tesla's new car registrations in the European Union plummeted 17% year-over-year in January 2026, dropping to 8,075 units from 9,733 units in January 2025.
This decline caused Tesla's EU market share to slip to 0.8%, down from 1.0% a year earlier. The news contributed to a 2.9% drop in TSLA stock on Monday, February 23, 2026, closing at $399.83, with a further 0.21% decline in Tuesday's pre-market trading.
In sharp contrast, Chinese automaker BYD experienced explosive growth in the same period. BYD's EU registrations surged 165% year-over-year to 18,242 units, more than double Tesla's volume. This surge solidifies BYD's lead in the region after it overtook Tesla as the world's best-selling all-electric car brand in 2025.
The broader EU car market was also soft, with total new-car registrations dropping 3.9% in January to 799,625 units—a five-month low. Other major automakers like Volkswagen (down 3.8%), BMW (down 3%), and Renault (down 15%) also saw declines, while Stellantis registered a 7% gain.
Despite the overall market contraction, the transition to electrification continues. Battery electric vehicle (BEV) market share in the EU rose to 19.3% in January, up significantly from 14.9% a year ago. Hybrid electric vehicles remained the most popular powertrain, capturing 38.6% of registrations.
The data underscores an increasingly crowded and competitive European EV landscape. While BEV adoption is rising, growth is now distributed across a wider range of manufacturers as European carmakers expand their electric line-ups. Tesla's regional market share hit a multi-year low of 1.4% in 2025, and the January numbers suggest the competitive pressure is intensifying.
In the United States, EV sales dropped 30% year-over-year in January, partly due to the removal of the $7,500 federal purchase tax credit. However, Tesla's US market share actually climbed to around 61% in January, up from 57% in December. In China, Tesla recently launched zero-interest loan offers, triggering a broader car financing war.
Wall Street's consensus rating on TSLA sits at Hold, with an average price target of $396.80 implying roughly 1% downside from current levels. Tesla plans to spend around $20 billion on new equipment this year, compared to its typical annual spend of under $10 billion.
