Week of February 25 for Tesla: Introduction of Model Y, Carbon credit agreements, Hardware update 4 recall, Robotics initiatives, Musk's conversation with Weidel
Tesla Model Y Launch in Western Markets: Mixed Reception in Europe
The Tesla Model Y, following a successful debut in Asia with its refreshed 2025 "Juniper" version, has made its way to Western markets, including Europe and North America, starting in early 2025. However, the reception in Europe has been less than anticipated, with the revamped Model Y failing to generate significant sales growth across most major European countries[1][2].
A New Look and Improved Features
The 2025 Model Y refresh was first unveiled in China in January 2025, featuring a host of updates such as a full-width light bar, a rear-seat touchscreen, and the retention of the traditional turn signal stalk[2][4]. Deliveries commenced in March 2025 in the U.S., Canada, Mexico, and Europe.
European Sales Struggles
Tesla has faced a decline in Model Y sales in many European countries, including Sweden (-88% July drop), Denmark (-49%), Netherlands (-62%), Belgium (-58%), Italy (-5%), and Portugal (-49%) after the relaunch[1]. However, there are some bright spots, with Norway and Spain experiencing increased sales due to financial incentives and strong overall EV demand.
Competitive Market Landscape
Despite Tesla's strong brand and the Model Y being Europe's best-selling EV by volume, competitors like Volkswagen have gained ground, including newcomers such as Skoda and Renault offering competitively priced alternatives[1][3].
Pricing Adjustments and New Variants
In an effort to improve affordability and market share, Tesla has implemented price cuts and is planning a new budget Model Y variant, the "E41," aimed at the UK and potentially broader Western markets[5].
North American Launch and Expanding Offerings
The refreshed Model Y was also launched in the U.S., featuring a starting price around $60,000 for the Launch Series edition, with improved range and driver-assist features. The three-row seven-seater version was reintroduced mid-2025, indicating Tesla's ongoing efforts to diversify its offerings[2][4].
Looking Ahead
While the Tesla Model Y's refreshed version has achieved a successful launch in Asia and started rolling out in Western markets, its sales momentum in Europe is currently facing headwinds, with market share pressure from competitors and mixed consumer reception despite pricing adjustments and product updates[1][5].
Other Developments
Elon Musk predicted that Full Self-Driving (FSD) software would drive safer than the average human within the next three months or at least by the end of Q2 2025. Tesla could potentially earn more than 1 billion euros alone in the EU in 2025 from the sale of CO2 credits to other automakers. The Model Y still has a turn signal lever on the left, unlike the Model S, Model X, Model 3, and Cybertruck[6].
Tesla is recalling vehicles equipped with the fourth hardware generation, AI4.1, due to issues that may cause sudden loss of Autopilot, GPS navigation, and reverse camera functionality, and high idle consumption[7]. The Model Y features a camera in the front bumper, which should aid manual and later automatic maneuvering with Tesla's Autopilot software, FSD.
Elon Musk held a conversation with AfD's chancellor candidate, Alice Weidel, which was criticized by German politicians and media as interference due to Musk's previous endorsement of the AfD[8]. Elon Musk reiterated that human-like robots could potentially enable unlimited economic growth[9].
Orders for the revamped Model Y began on Friday, with deliveries set to start in March[10]. Tesla aims to build several thousand Optimus robots in 2025, 50,000 to 100,000 in the next year, and 500,000 units in three years[11]. During the conversation with Alice Weidel, the two largely agreed and shared many laughs[12].
The revamped Model Y, initially launched in Asia, includes aesthetic changes and a slight increase in battery capacity for the Long Range variant[13]. The Model Y no longer has a lever for selecting drive mode on the right side of the steering wheel[14]. The Model Y features continuous light bars similar to the Cybertruck and Cybercab, improved seats and sound insulation, and a central screen for rear passengers[15].
Elon Musk participated in a roughly hour-long CES interview discussing various topics, including Mars missions, Neuralink brain interface project, role as co-chair of a Trump commission, citizen journalism, Starlink internet, and the present and future of the social medium X[16]. It is estimated that around 240,000 electric vehicles in the US, mainly from 2024, may be affected by the recall, but Tesla believes only 2% are affected[17]. Elon Musk's support for Weidel's party was reaffirmed during the conversation[18].
Tesla was not present at the CES electronics show in Las Vegas this week, likely because the new Model Y is not yet available in the US[19]. In the CES interview, Elon Musk stated that for him, Tesla has been essentially an AI and robotics company for some time[20]. The live conversation between Elon Musk and Alice Weidel was watched by around 200,000 X users[21].
- The introduction of artificial-intelligence features, such as Full Self-Driving (FSD) software, is expected to revolutionize the lifestyle and commuting experience of Tesla Model Y owners.
- The integration of technology in arts and design can be seen in the Tesla Model Y's refreshed version, featuring a full-width light bar and a rear-seat touchscreen.
- The political landscape of Europe has influenced the sales of electric-vehicles, with Tesla's Model Y facing stiff competition from European manufacturers like Volkswagen, Skoda, and Renault.
- The future of the automotive industry in Europe, specifically in the electric-vehicle sector, is uncertain due to mixed consumer reception and pressures from competitive pricing.
