Tesla Sales in Europe Outstripped by Chinese Rival BYD Amid Sluggish Demand and Musk's Tarnished Reputation

Tesla’s struggle in the European market deepened in July, as the EV pioneer suffered another steep sales decline despite efforts to refresh its lineup.

Tesla delivered 8,837 vehicles across the EU, the EFTA trade bloc, and the UK last month—a 40% drop from 14,769 units in July 2024, according to data released by the European Automobile Manufacturers Association (ACEA), . This marked Tesla’s seventh consecutive month of shrinking market share, with its share squeezed to 0.8% from 1.4% a year earlier.

The slump persisted even after Tesla’s revamp of its Model Y, suggesting that controversies surrounding CEO Elon Musk’s political stances may still be weighing on the brand. Musk’s public break with U.S. President Donald Trump has yet to translate into improved sentiment. Year-to-date figures show Tesla’s deliveries in Europe are down 33% for the January–July period.

Meanwhile, Chinese rival BYD continued its rapid ascent. The Shenzhen-based automaker more than tripled its European sales year-on-year in July, delivering 13,503 vehicles compared with 4,151 a year earlier—a 225% increase—boosting its market share to 1.2% and leaving Tesla behind for another month. BYD had already overtaken Tesla in April and recently launched its Dolphin Surf EV in the UK, priced from £18,650.

The broader European auto market showed resilience. New car sales rose 5.9% in July to 1.085 million vehicles, buoyed by an 11.1% jump in Germany, which offset declines in the UK (-5%), France (-7.7%), and Italy (-5.1%). Spain (+17.1%), Poland (+16.5%), and Austria (+31.6%) also posted strong gains. Registrations at Volkswagen rose 11.6% year-on-year and Renault gained 8.8%, while Stellantis slipped 1.1%.

Electrification continued to accelerate. In the first seven months of 2025, 1,011,903 new battery-electric vehicles were registered across the EU, accounting for 15.6% of the market. Hybrid-electric vehicles proved even more popular, with 2,255,080 units sold so far this year, nearly 35% of the EU market, supported by strong growth in France, Spain, Germany, and Italy. In July alone, registrations of battery-electric, hybrid-electric, and plug-in hybrid cars rose 39.1%, 56.9%, and 14.3%, respectively, bringing their combined share of EU registrations to nearly 60%, up from 51% a year earlier.

Despite this robust demand, European carmakers face mounting challenges. ACEA CEO Ola Kaellenius and other industry leaders recently warned Brussels that EU climate targets—including a 100% cut in CO2 emissions from cars by 2035—are no longer feasible. Automakers have already booked multi-billion-dollar losses and issued profit warnings, with several also citing the impact of U.S. tariffs.