Turkey’s EV Tax Hike Disrupts Tesla’s Growth Strategy Amid Global Demand Challenges

Tesla faces another setback as Turkey implements a significant electric vehicle tax increase, eroding the competitive pricing advantage that fueled its recent sales surge in the market. The presidential decree, published in Turkey's Official Gazette, raises the EV tax rate that previously allowed Tesla to offer localized Model Y variants at 1.87 million liras ($46,100).

The new policy adds approximately $6,000 to vehicle prices, creating immediate demand headwinds. This comes at a critical juncture—Turkey had become Tesla's rare bright spot in Europe, with June 2025 sales jumping 171% year-over-year while continental registrations declined 23%.

Elon Musk's warning about a difficult 2025 now carries added weight. The tax change undermines Tesla's strategic workaround for fading U.S. subsidies and intensifies pressure to accelerate self-driving technology development. Combustion engine vehicles remain taxed under the old system, further skewing the competitive landscape.