"Tesla's dominance in the electric vehicle industry may be facing competition from a new player: Škoda, as the German electric car market undergoes transformation."
In a striking turn of events, Skoda has managed to break into the top group of automakers in Germany, a position it was far from three years ago. Meanwhile, Tesla, once the dominant force in the electric vehicle (EV) market, has seen a significant decline.
The decline in Tesla's market share can be attributed to a variety of factors. Firstly, intensifying competition, particularly from Chinese EV manufacturers like BYD, has taken a toll on Tesla's sales. BYD's sales surged nearly fivefold in July 2025, offering attractive EVs with good ranges and competitive prices starting at around €18,000-€20,000 (approx. $20,000 USD), despite EU tariffs.
Tesla's sales figures have also been affected by regulatory hurdles, backlash related to CEO Elon Musk’s public political positions, and the delay in the deployment of Tesla's Full Self-Driving (FSD) software. Additionally, Tesla's pricing is relatively high, with the refreshed Model Y starting at around €45,970 and Model 3 at €40,970, even when supported by low-interest financing offers.
In contrast, Skoda’s success in the EV market can be attributed to its position within the Volkswagen Group, which controls 8 of the top 10 best-selling BEVs in Germany. Skoda’s operating profits surpassed Porsche’s, reflecting effective market positioning and a business model that is better aligned with current market trends favoring accessible, practical EVs.
The Volkswagen Group’s strategy includes a diverse portfolio of BEVs covering different segments and price points, appealing to a broad consumer base and boosting sales without reliance on government incentives, which were eliminated in late 2023. Skoda’s ability to provide competitive and well-received electric vehicles contributes to its growing presence and customer acceptance in Germany's EV market.
As a result, Skoda has a market share of 9.1% in the first seven months of 2025 in Germany, almost three times that of Tesla. In July 2025, only two Model S and one Model X were newly registered in Germany. The term "electric car" is increasingly associated with brands like VW, BMW, or Škoda, rather than Tesla.
Skoda's rapid growth is attributed to a broad model portfolio and consistently strong sales figures, especially in Austria. The Czech manufacturer has introduced several new models, including the Enyaq and Elroq, which focus on modern technology, range, and a balanced price-performance ratio.
European manufacturers are taking the lead in innovation in the electric vehicle market, with Skoda strongly shaping the electric market with new models like the Enyaq iV and continuously gaining market share. Skoda is currently the fourth most popular brand in Germany, with VW, BMW, and Skoda having a combined market share of 36.1% in the first seven months of 2025.
Tesla's decline in Germany is also due in part to its unfavourable price-performance ratio compared to competitors like VW and BMW. Tesla will not be present at the IAA auto show in Munich in 2025, further highlighting its reduced presence in the German market.
Elon Musk's public proximity to US President Donald Trump could further damage Tesla's image with European buyers, adding to the challenges the company faces in the region. Ferdinand Dudenhoffer, of the CAR Institute, has stated that Skoda is the "new Tesla" in terms of market share in Germany. The CAR Institute attributes Tesla's decline to a limited model range and an unfavourable price-performance ratio.
In summary, Skoda's success in the electric vehicle market in Germany can be attributed to its strong position within the Volkswagen Group, a broad and appealing EV model lineup, and the parent group's dominance in Germany's EV sales. Tesla's decline, on the other hand, is due to fierce competition, particularly from cheaper and diverse Chinese brands, Tesla's elevated prices, and reputational/regulatory challenges. This dynamic highlights a broader trend in Germany and Europe, where Tesla’s early dominance is challenged by incumbents and new entrants offering diverse options at varying price points with strong local market integration.
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