Volkswagen EV Growth Accelerates as Tesla Europe Sales Fall in 2025

Volkswagen VWAGY, a leading German automaker, achieved a major milestone in 2025 by overtaking Tesla TSLA to become the best-selling electric vehicle (EV) brand in Europe. This marks a significant shift in the European EV market, where Tesla has dominated for several years. The change reflects growing competition and increasing consumer interest in a wider range of electric models offered by traditional automakers.

One of the main reasons behind Volkswagen’s success was its broad electric vehicle lineup. Models, such as the ID.3, ID.4 and ID.7, delivered strong performance throughout the year. These vehicles appealed to different customer groups, helping Volkswagen attract buyers across multiple price ranges and vehicle types. Combined, sales from these models helped Volkswagen surpass Tesla’s total EV deliveries in the region.

Volkswagen sold 274,417 electric vehicles in Europe last year, representing a 56% year-over-year increase. These sales came from the European Union, the United Kingdom, and European Free Trade Association (“EFTA”) countries. Strong demand for the ID.3 hatchback, ID.4 crossover, and ID.7 sedan and wagon drove much of this growth, pushing Volkswagen ahead of Tesla in total brand sales.

Volkswagen also benefited from its strong presence across European markets. High brand recognition, extensive dealer networks and local manufacturing capabilities helped the company respond quickly to rising EV demand. These structural advantages supported consistent supply and improved availability across key countries.

In contrast, Tesla’s performance in Europe weakened during 2025. Per EVDANCE, The company’s EV sales declined 27% year over year to 238,765 vehicles, causing Tesla to lose its top position in the region. While Tesla’s Model Y remained one of Europe’s best-selling electric cars, the overall decline in deliveries affected its standing in the European EV market.

Despite losing its top spot, Tesla remains an important player in Europe’s EV market. The Model Y remained one of the best-selling electric vehicles in the region, demonstrating that Tesla’s products continue to have strong appeal. However, competition has intensified, and Tesla now faces increasing pressure from established automakers like Volkswagen.

Overall, Volkswagen’s rise to the top of Europe’s EV market in 2025 highlights a clear shift toward greater competition and a more diversified electric vehicle landscape. While Tesla remains a strong contender, the growing strength of established automakers like Volkswagen is reshaping the region’s EV leadership.

Volkswagen AG Unsponsored ADR Price, Consensus and EPS Surprise

Volkswagen AG Unsponsored ADR price-consensus-eps-surprise-chart | Volkswagen AG Unsponsored ADR Quote

Zacks Rank & Other Key Picks

VWAGY stock currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the auto space are Mercedes-Benz Group AG MBGYY and Mazda Motor MZDAY, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for MBGYY’s 2025 and 2026 EPS has improved 3 cents and slipped 10 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for MZDAY’s fiscal 2026 and 2027 EPS has improved 6 cents and 3 cents, respectively, in the past 60 days.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research