Does Tesla's February Sales Surge Signal a Turnaround in Europe?

Tesla, Inc. TSLA expanded its market share across several major European markets in February, which suggests signs of recovery after two consecutive years of declining sales in the region, per Reuters.

In France, the EV manufacturer’s registrations, a sales indicator, jumped 55%, even as most competitors recorded year-over-year declines. Registrations more than doubled compared with February 2024 in Portugal, climbed 74% in Spain, 32% in Norway and 14% in Belgium. However, they dropped 45% in the Netherlands, 18% in Denmark and 7% in Italy. Data from the United Kingdom and Germany, Europe’s two largest auto markets, is expected later this week.

Tesla’s European deliveries declined 27% last year amid intensifying competition, particularly from Chinese EV brands, controversy surrounding Elon Musk’s political views and an aging product portfolio.

In response, the company introduced lower-priced variants of the Model Y and Model 3 in the United States and Europe, with deliveries beginning late last year.

Its market share across the European Union, the United Kingdom and the European Free Trade Association edged down to 0.8% in January from 1% a year earlier. This remains well below its 1.8% share in 2025, 2.5% in 2024 and 2.9% in 2023 when the Model Y SUV ranked as the world’s top-selling vehicle. TSLA carries a Zacks Rank #4 (Sell) at present. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sales of Tesla’s Chinese Competitors in Europe

BYD Company Limited BYDDY has established itself as a local European producer with a manufacturing plant in Hungary capable of building 300,000 vehicles annually. BYD is still in the early stages of its European expansion and aims to grow its footprint further. BYD recorded 187,657 new vehicle registrations across Europe in 2025, up 268.6% year over year, per the European Automobile Manufacturers Association.

Geely Automobile Holdings Limited GELHY has maintained a long-standing presence in Europe through its ownership of brands such as Volvo Cars, Polestar and Lotus Cars, a 50% stake in Smart and London’s electric taxi business, per Forbes. Geely also holds a 10% stake in Mercedes-Benz Group. The company is pursuing further expansion in the region and is preparing to introduce the Starray EM-I, a plug-in hybrid SUV positioned slightly below the EX5 in both size and price. In 2025, Geely’s brands collectively ranked as the largest Chinese automotive group in Western Europe, delivering 381,285 vehicles and capturing a 3.2% market share.

TSLA’s Price Performance, Valuation and Estimates  

Tesla has underperformed the Zacks Automotive-Domestic industry in the past six months. Its shares have gained 11.6% compared with the industry’s growth of 23.9%. 

 
From a valuation perspective, TSLA appears overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 14.04, higher than the industry’s 3.35. 

The Zacks Consensus Estimate for Tesla’s 2026 EPS has moved down 4 cents in the past 30 days. The Zacks Consensus Estimate for Tesla’s 2027 EPS has headed south 25 cents in the past 60 days.

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

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