Europe’s EV Race: Tesla Struggles While BYD Surges in Market Share

Tesla’s sales in Europe plummeted in July, marking its seventh consecutive monthly decline, while Chinese rival BYD posted a dramatic surge, underscoring the intensifying battle in the electric vehicle (EV) market.

Tesla Sales Drop Despite Rising EV Demand

According to data from the European Automobile Manufacturers Association (ACEA), Tesla registered 8,837 new vehicles in July, down 40% year-over-year. In contrast, BYD recorded 13,503 new registrations, a staggering 225% increase compared to the same period last year.

This slump comes even as overall electric vehicle sales in Europe continued to grow, highlighting Tesla’s struggles to maintain its competitive edge in the region.

Why Tesla Is Losing Ground in Europe

Tesla is facing several challenges in Europe, including:

Fierce competition from Chinese EV makers, especially BYD, which offers aggressive pricing and has rapidly expanded its showroom network.

Brand reputation concerns fueled by CEO Elon Musk’s controversial statements and his ties to the Trump administration.

Lack of new models: Tesla has not significantly refreshed its vehicle lineup. The company plans to launch an affordable EV in the second half of 2025, aiming to boost sales and regain momentum.

Meanwhile, Chinese brands like BYD have been aggressively rolling out new models and expanding into Europe over the past two years, capturing a record market share of over 5% in the first half of 2025, according to JATO Dynamics.

European Auto Market Shows Mixed Performance

Tesla is not alone in feeling the heat from Chinese EV makers. Stellantis, Hyundai, Toyota, and Suzuki also posted year-on-year declines in July registrations.
By contrast, Volkswagen, BMW, and Renault Group saw increases in new car registrations across Europe during the same period.

Investor Takeaways

Market share pressure intensifies: Tesla is losing ground in Europe while Chinese brands rapidly gain traction.

Profit margin risks: Despite plans for a budget-friendly EV in 2025, Tesla may continue facing challenging quarters in the near term.

EV demand remains strong: Europe’s appetite for electric vehicles is growing, but competition is set to become even fiercer as new players enter the market.