Tesla's stock drops as European sales dive. That's not the only problem.

By William Gavin

The electric-vehicle maker is experiencing a sustained sales slump in Europe, and is having trouble winning over regulators for a key technology

Tesla has introduced cheaper, stripped-down versions of its Model Y and Model 3 electric vehicles in an effort to improve sales across multiple markets.

Tesla is still struggling to compete in Europe, where its electric-vehicle sales are flagging, and regulatory approval for a key technology appears to be out of reach.

Tesla (TSLA) delivered 5,647 electric vehicles to customers in the European Union in October, a 48% decline relative to a year earlier, according to the European Automobile Manufacturers' Association. The company is on pace for a 39% decline in sales versus 2024.

Only two brands - British luxury-vehicle brand Jaguar and the Lancia brand, sold by Stellantis (STLA) - have suffered steeper declines.

Tesla's share of the market in October- which stood at 0.6%, compared with 1.3% the year prior - was its lowest since April.

Tesla has struggled to boost its sales in Europe, where it has suffered backlash tied to Chief Executive Elon Musk's political activism and previous association with the Trump administration and far-right political parties in Europe. The company recently introduced cheaper versions of some of its bestselling vehicles in order to entice consumers, but competition is tough.

Shares of Tesla are down more than 2% in Tuesday action.

Several companies, including Stellantis, have focused on budget EVs to drive sales in Europe. And deliveries from China's BYD (CN:002594) and SAIC Motor Corp. (CN:600104) surged by 195% and 56%, respectively, in October, compared with a year prior, largely thanks to their cheap offerings.

Poor sales aren't the only thing giving Tesla grief in Europe. The company also faces headwinds as it tries to convince regulators to approve Full Self-Driving, its advanced driver-assistance system, which could provide Tesla with additional revenue and training data.

Over the weekend, Tesla said its "main path to success" is working with RDW, the vehicle authority of the Netherlands. In a statement posted to X, Musk's social-media platform, Tesla said the RDW had "committed" to giving it national approval to roll out FSD in February 2026.

However, the RDW clarified on its website that Tesla is only scheduled to demonstrate its FSD Supervised in February, noting that approval isn't guaranteed. If the RDW decides further testing is necessary, it would be a setback for Tesla's expansion efforts.

The automaker has focused on the Netherlands as its key to broad approval in the E.U. Once it wins national approval for FSD there, the other E.U. nations have the option to recognize the exemption and roll out the software, Tesla said. Then, it would ask an E.U. committee to officially approve the software.

That would solve a major headache for Musk, who has repeatedly voiced his irritation with the regulatory approval process for FSD in Europe. At Tesla's annual meeting, he asked European customers to pressure regulators.

"Europe is strangling itself with regulation," he added in a post on X last week.

-William Gavin

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11-25-25 1123ET