Tesla Struggles as EV Sales Plummet Globally

Automaker faces challenges in key markets like China and Europe amid industry-wide slowdown

Published on Feb. 21, 2026

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Electric vehicle sales fell 3% worldwide in January compared to the same period last year, as the industry braces for a deep freeze. China, the world's largest EV market, saw a 20% drop in sales, while North America plunged 33%. Tesla, once the dominant foreign EV brand in China, sold fewer than 20,000 vehicles in the country in January, its lowest figure since late 2022. The company also continues to struggle in Europe, where its registrations collapsed by 42% in France and fell to just 82 cars in Norway. Tesla's attempt to return to growth after two years of annual sales declines is off to a rough start.

Why it matters

The global EV market is facing significant headwinds, with policy changes in key markets like the US and China threatening to throw the industry into a deep freeze. This is particularly challenging for Tesla, which has relied heavily on strong sales in China and Europe to drive its growth. The company's struggles in these regions, combined with the end of tax credits in the US, could make it difficult for Tesla to regain its momentum and return to profitability.

The details

The EV industry is facing a number of challenges, including the removal of tax credits in the US and changes to government incentives in China. In the US, EV sales have plummeted since the $7,500 tax credit for new electric vehicles was removed in September 2025. In China, the government has moved to end a key tax exemption for EV purchases and adjusted its trade-in scheme to make it less generous for battery-powered vehicles. These policy changes have had a significant impact on EV sales in both markets.

  • In January 2026, electric vehicle sales fell 3% worldwide compared to the same period last year.
  • In North America, EV sales fell 33% in January 2026.
  • In China, EV sales fell 20% in January 2026.
  • Tesla sold fewer than 20,000 vehicles in China in January 2026, its lowest figure since late 2022.
  • Last year, BYD took Tesla's crown as the world's largest seller of battery-powered vehicles.

The players

Tesla

An American electric vehicle and clean energy company that designs and manufactures electric cars, battery energy storage from home to grid-scale products, and related products.

BYD

A Chinese multinational automotive company that specializes in electric vehicles, rechargeable batteries, and related products.

Elon Musk

The CEO and co-founder of Tesla.

Xiaomi

A Chinese multinational technology company that designs, develops, and sells smartphones, mobile apps, and other consumer electronics.

Ford, GM, and Stellantis

The three major American automakers, also known as the Detroit "big three", that have collectively announced over $50 billion in charges related to their EV businesses in recent months.

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What they’re saying

“We're literally saying what we're going to do and have said what we're going to do for a while.”

— Elon Musk, CEO and co-founder of Tesla (Business Insider)

“I think long-term, really the only vehicles that we'll make will be autonomous vehicles, with the exception of the next-generation Roadster.”

— Elon Musk, CEO and co-founder of Tesla (Business Insider)

What’s next

Tesla will need to adapt its strategy and product lineup to address the changing market conditions in key regions like China and Europe. The company's focus on autonomous vehicles and robotaxis could be a long-term solution, but in the near term, it will need to find ways to regain its competitiveness in the traditional EV market.

The takeaway

The global EV market is facing significant headwinds, with policy changes and increased competition from local brands in key markets like China and Europe posing major challenges for industry leaders like Tesla. The company's struggles highlight the volatility and uncertainty facing the EV industry as it navigates a period of rapid change and transformation.