Tesla is slashing Model 3 prices in Europe—but is a cheaper electric car enough to overcome falling sales, fierce competition, and CEO Elon Musk’s mounting controversies?

Elon Musk’s bet: a lower-cost Model 3 Standard, now listed at €37,970 in Germany and comparably priced across Scandinavia, will reignite demand by broadening Tesla’s appeal. But the landscape for electric vehicles (EVs) in Europe has shifted dramatically—and not just because of sticker shock.
Why This Matters
- Tesla’s European sales are in free fall, outpaced by Chinese giant BYD for the first time ever this spring.
- Musk’s polarizing political actions—from his stint in Trump’s administration to public gestures and controversial statements—have sparked a customer backlash, compounding the company’s struggles.
- Europe’s appetite for EVs is cooling, with new taxes and slower sales growth (UK EV sales rose just 3.6% in November, the slowest in two years).
What Most People Miss
- The price cut isn’t just about affordability: It’s a strategic move to counter both negative PR and aggressive competitors like BYD, who are winning on price, features, and local incentives.
- Europe’s regulatory and tax environment is shifting. The UK’s upcoming 3p-per-mile tax on EVs (starting 2028) could cost drivers an average of £250 a year, eroding a core advantage of EV ownership.
- Brand reputation matters more than ever in a crowded EV market: Musk’s personal actions are now a business liability, not just a Twitter sideshow.
Key Takeaways
- Price alone can’t fix everything. The Model 3’s new price point may attract some buyers, but broader trends—political, economic, and competitive—pose deeper challenges.
- Competition is fierce and rising. BYD’s European surge is a warning shot: Tesla’s first-mover advantage is gone, and rivals are hungry.
- Policy headwinds are real. Governments, once the ally of EV adoption, are now tightening the screws with new taxes and fewer incentives.
- Reputation risk is underestimated. Political controversies alienate core buyers, especially in markets where brand image and values are paramount.
Industry Context & Comparisons
- BYD’s European sales more than tripled in the past year, outpacing Tesla and establishing China as a formidable force in the EV market.
- Legacy automakers (VW, BMW, Renault) are closing the “tech gap” with improved EV offerings and homegrown European trust.
- Tax policies and charging infrastructure remain major bottlenecks for EV adoption, with public support for green policies wavering as the cost of living rises.
Action Steps for Buyers & Industry
- Prospective buyers: Watch for further discounts and incentives as competition heats up. Factor in new taxes and total cost of ownership.
- Automakers: Invest in brand trust and local partnerships. Price cuts alone won’t build loyalty in a skeptical market.
- Policy makers: Balance fiscal needs with climate goals—penalizing EVs too soon risks stalling the green transition.
Mike Hawes, SMMT CEO: “A sustained increase in demand for EVs cannot be taken for granted. We should be taking every opportunity to encourage drivers to make the switch, not punishing them for doing so.”
The Bottom Line
Tesla’s price cuts are a bold play, but the real battle is for European hearts and minds. With rising competition and a CEO in the political spotlight, the company’s future in Europe will depend on more than just affordability—it will require brand rehabilitation, policy adaptation, and relentless innovation.














