Tesla Expands German Production Despite Falling European Sales

Rising Output at Berlin Gigafactory

Tesla will increase production at its Berlin-area Gigafactory after what it describes as “very good sales figures.” Plant manager Andre Thierig confirmed to German news agency DPA that the automaker has revised its Q3 and Q4 production plans upward, though he did not disclose specific targets.

European Sales Struggles

The announcement comes against the backdrop of a sharp decline in Tesla’s European sales. Data from the European Automobile Manufacturers’ Association (ACEA) shows that registrations fell 43.5% year-over-year in the first seven months of 2025, down to 77,446 units across the EU.

In Germany, a crucial market for Tesla, the situation is even tougher. According to KBA, Tesla’s sales dropped 57.8% year-over-year during the same period, with stiff competition from German incumbents like Volkswagen and BMW, as well as Chinese brands such as BYD.

Market Confidence Despite Setbacks

Despite the slump, Tesla maintains that its long-term outlook is strong. Thierig said the company “supplies well over 30 markets and definitely sees a positive trend.” The optimism comes as the automaker seeks to balance weaker regional sales with its global presence, which still includes North America and emerging markets.

Model Y Production in Focus

The Berlin plant currently builds only one vehicle—the Tesla Model Y crossover. Once the best-selling car in Europe and the world, the Model Y has since lost its crown. CEO Elon Musk has pointed to factory retooling tied to the vehicle’s facelift as a reason for the decline in sales, but recovery has been slow.

Tesla does not disclose production or delivery data on a per-model or per-country basis. Instead, it groups sales figures into broad categories, which often makes it difficult to assess regional performance in detail.

Competition and Consumer Shifts

Tesla’s European slowdown reflects wider challenges in the EV market. German automakers have doubled down on electrification, while Chinese brands are entering Europe with aggressively priced, feature-rich EVs. Consumers, meanwhile, are becoming more price-sensitive as government subsidies are scaled back in major markets like Germany.

What’s Next for Tesla in Europe?

Tesla’s decision to boost Berlin production highlights its belief in a potential rebound. However, the company will need to convince European consumers that its cars remain competitive in price, features, and availability.

If production outpaces demand, Tesla could rely more heavily on exports from its German factory to nearby markets. But with sales falling nearly 50% across Europe, the question remains whether increased output will translate into stronger market share—or simply higher inventory.

Recommend Reading: Tesla Faces Brand Struggles Despite Elon Musk’s Pledge to Refocus