Tesla’s Latest Approach Isn’t Working

If you’re an electric-vehicle enthusiast in the United States, you can’t help but be a bit jealous of Europe right now.

Increased competition from China has forced the European automakers to get better and better, and now, buyers have more and better choices than they’ve ever had. It’s little wonder why EVs outsold gas cars in Europe in December for the first time.

But Tesla, as of late, has largely been left out of that success story. Perhaps due to their bounty of EV choices, or the personal choices of CEO Elon Musk, Tesla’s European sales hit the skids in 2025. And the latest data reveals that trend probably isn’t changing soon. 

Welcome back to Critical Materials, our morning roundup of industry and technology news. Also on deck today: The curious, repeatedly disavowed story of a Ford-Xiaomi tie-up deal, and why some U.S. car dealers are getting real about EVs. 

25%: Tesla’s European Sales Show Few Signs Of Life In January

The new, more aggressively priced but aggressively de-contented Model Y Standard and Model 3 Standard were supposed to help lift Tesla’s sales in Europe and other markets. But if January’s sales data is any indication, it’s not really working. Here’s Reuters with more:

Elon Musk’s full-electric brand, whose market in the continent shrank 27% last year, registered 26% more cars in Sweden and 3% more in Denmark in January than in the same month of 2025, with 512 and 458 cars sold respectively, official data showed on Monday.

Its registrations, a proxy for sales, fell 88% to 83 vehicles in Norway, one of the most brand-loyal countries in Europe which has been at the forefront of EV adoption, and by 42% to 661 in France.

On last week’s fourth-quarter earnings call, Musk and his team made clear that they see a future well beyond cars at Tesla: AI, robotics, automated taxis and energy storage will carry the day. But its most consistent and profitable business line is still selling cars. If that continues its downward slide, it may become more of a problem than Musk would like to admit.

Our European correspondent will have a more in-depth review of the Model Y Standard soon. I’m eager to hear his thoughts on the car.

50%: A Ford-Xiaomi Tie-Up In The Works? Ford, Xiaomi Say No

Photo by: Xiaomi

Have you driven a Xiaomi lately? Unless you live in China, or are a Wall Street Journal columnist or popular YouTube reviewer, the answer is “probably not.” But more and more people across the global auto industry are aware of how good the Chinese gadget company’s first EVs are. Ford CEO Jim Farley famously drove one for a while and continues to be effusive about how good the car was.

Good enough that Ford should get into business with Xiaomi?

That’s the word on the street from this Financial Times story over the weekend, which turned out to be highly contentious for reasons I’ll soon explain. But first, the story itself:

Ford has held talks with electric vehicle maker Xiaomi over a partnership that would pave the way for Chinese carmakers to gain a foothold in the US, according to four people familiar with the talks.

While the discussions were preliminary, Ford has explored forming a joint venture with Xiaomi to manufacture EVs in the US, according to the people.

Ford has also spoken with BYD and other Chinese carmakers about potential collaboration in the US.

That’s all we know about these reported discussions, but it’s quite the bombshell: a Ford-Xiaomi joint venture to make EVs in America? That would be a game-changer in the space, and for the continued expansion of China’s auto industry.

But the denials have been vehement: Ford’s chief communications officer, Mark Truby, took to X this weekend to say: “This story is completely false. There is no truth to it.”

Then Xiaomi did the same, saying, “This report about a joint venture with Ford Motor Company is completely false. Xiaomi does not sell its products and services in the United States and is not negotiating with any companies to do so.” (A statement Truby later reposted as well.)

Then again, this isn’t just some rumor-mongering from a random blog. The Financial Times is as serious as business publications get, and this story cited four unnamed sources and ran with four bylines on three continents.

All of this is to say: I’m certainly recognizing these companies’ right to deny this story on the record, which is why I’m including their statements here, but I’m keeping an eye on this one.

But as that story points out, Ford (or any other automaker) would have a very tough time launching a joint venture with a Chinese automaker on U.S. soil. Ford is already in hot water with local politicians over its Michigan battery plant that licenses technology from CATL. A full-blown JV, or deal to get Chinese cars made here, would infuriate China hawks on both sides of the aisle.

But as the FT also notes, President Donald Trump is headed to China in April and may strike a trade deal there. He’s been more open to the idea of Chinese automakers in the U.S. lately, so long as they build factories here and bring jobs. The winds may be shifting this year.

75%: Are Some U.S. Dealers Finally Playing The Long Game On EVs?

Mercedes-Benz Multiport charger

Photo by: Mercedes-Benz

The National Automobile Dealers Association is holding its annual conference in Las Vegas next week. Given their historic skepticism and outright resistance to selling EVs, you’d think nearly all the dealers attending that trade show will be full-on rejoicing that America’s so-called “EV mandate” is gone and that many of their automaker partners are pivoting back to gas.

Not so, according to Automotive News. Or at least, not across the board. Automotive News staffers spoke to dealers, dealer council chairs and regional dealer-industry leaders about the situation around electric cars, and many of them are either concerned about losing sales or willing to play the long game:

With automakers cutting back EV production or halting production altogether, some dealers are concerned about making up those sales. [Honda National Dealer Advisory board chair Bill Feinstein] is one such dealer, and he’s particularly worried about Honda reportedly cutting back production of the Prologue after EVs made up 15 percent of his dealerships’ sales in many months.

We’re ”going to have to figure out how to make up those sales with other products,” he said. “I’m hopeful that we will just get more production of core products like CR-V to offset that.”

While automakers are scaling back on some projects, EVs aren’t going anywhere, especially for Toyota, [George Haddad, Toyota National Dealer Advisory Council Chairman] said.

“They want to be in the forefront of any one of those areas, so they’re going to keep pushing,” he said.

It’s naive to think that the pressure to electrify from the government won’t return with the next Democratic administration, Hall said. And if dealers want to survive a constantly changing political climate, they’ll need to stay on their toes.

“Dealers need to wake up, pay attention,” he said. “These decisions are going to make a difference. Elections have consequences … EVs are not going to go away.”

Even with some automakers and their dealers breathing a sigh of relief that they’re no longer under the gun to go all-electric within a decade or so, that idea—that this is a long-term shift—seems to be the broader industry consensus lately. We’ll soon see who’s able to plan for it.

100%: Could Tesla Mount A Car Comeback, At This Point? 

Tesla Model Y Standard Long Range Rear-Wheel Drive

Photo by: Tesla

If Elon Musk woke up one day and decided Tesla should get back into cars, what would you want to see? What features or new models could reverse its sales decline—or is the brand damage permanent at this point?

Contact the author: patrick.george@insideevs.com