TSLA stock (NASDAQ:TSLA) is under pressure as Tesla navigates shifting global dynamics in the electric vehicle (EV) market. Despite CEO Elon Musk’s insistence that demand remains strong, recent sales data—especially from Europe—tells a different story.

In May 2025, Tesla’s vehicle registrations in France plummeted 67% year over year, totaling just 721 deliveries. This marked the weakest performance in the region since 2022. What’s more concerning is that this drop came after the launch of the updated Model Y and the removal of prior production bottlenecks at Gigafactory Berlin.

European Demand for TSLA Stock Vehicles Slips

France isn’t alone. Portugal recorded a 68% drop in Tesla sales in the same period, despite overall EV sales growing 25%. Similar trends appeared in Denmark, Spain, Sweden, and the Netherlands—raising concerns that the weakness is systemic, not localized.

Tesla has responded with sweeping price cuts and promotional incentives across Europe, including Germany and the UK. While these tactics aim to spur demand, they also highlight the pressure the brand is under from intensifying competition.

Rivals like BYD (OTC:BYDDY), which recently overtook Tesla in European EV sales, are gaining ground. Meanwhile, traditional players such as Volkswagen (OTC:VWAGY) and Porsche (OTC:POAHY) are reclaiming lost market share through sleek EV offerings and loyal customer bases.

Norway: A Lone Bright Spot for TSLA Stock

Norway stands out as Tesla’s European success story, with sales soaring 213% year over year to 2,346 vehicles in May. However, the surge is largely attributed to aggressive financial incentives, such as zero-interest loans and generous EV subsidies. Still, brand perception is fragile.

A Norwegian EV Association poll showed that 43% of respondents would avoid buying a Tesla for political reasons. Elon Musk’s controversial alignment with Germany’s far-right AfD party and Tesla’s anti-union stance have triggered protests across dealerships in Europe, adding reputational headwinds to the company’s challenges.

TSLA Stock Under Pressure from Q1 Results

Tesla reported a difficult Q1 in 2025, with revenue slipping to $19.34 billion—down nearly $2 billion year over year. Net income fell sharply to $409 million, a dramatic decline from $1.39 billion in Q1 2024.

Production and delivery figures were also underwhelming: 363,000 vehicles produced versus 337,000 delivered. However, this quarter included a massive production line overhaul to accommodate the redesigned Model Y—a strategic move that, while costly in the short term, demonstrates Tesla’s ability to adapt quickly across global facilities.

Notably, Tesla’s energy storage business remains a growth area. The company deployed 10.4 GWh in Q1 and continues investing heavily in this vertical. However, ongoing trade tensions and tariffs could pose future risks, particularly in international energy markets.

Is TSLA Stock Still a Buy?

Tesla’s operational foundation remains solid. With operating cash flow at $2.16 billion and a cash balance of $37 billion at the end of Q1, the company is financially resilient. Capital expenditures were trimmed to $1.49 billion, down from $2.78 billion a year earlier, signaling more efficient capital allocation.

Looking ahead, Tesla is betting on a trio of innovation-driven growth engines:

1. Autonomous driving—including development of its Cybercab robotaxi concept.

2. Next-gen platform vehicles—aimed at reducing costs and expanding margins.

3. Vertical integration—especially in battery cell manufacturing to control costs and boost performance.

Out of 41 analysts, 16 rate TSLA stock a “Strong Buy,” while 13 suggest “Hold” and 10 issue a “Strong Sell.” The average target price sits at $290, well below its current price of $344, implying that some believe TSLA may be overvalued in the short term.

Final Thoughts on TSLA Stock

Tesla is no longer the untouchable EV leader it once was. With BYD, Volkswagen, and other rivals chipping away at market share and political controversies weighing on brand appeal, TSLA stock faces a tough road ahead in some regions. However, its innovation in autonomy, battery technology, and energy storage continues to offer long-term potential.

For investors, the key question is whether Tesla’s next wave of growth—driven by new platforms and advanced tech—can outweigh short-term market turbulence.

Featured Image: Freepik

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