Tesla Inc. (NASDAQ: TSLA) reported a sharp drop in European sales and market share in July, according to data released Thursday by the European Automobile Manufacturers’ Association (ACEA), even as the region’s overall electric vehicle sales continued to rise.
Tesla’s deliveries significantly lagged behind those of its Chinese rival BYD Co. (HK:1211), which appeared in the monthly ACEA data for the first time and overtook Tesla in both sales and market share.
New car registrations for Tesla in the European Union, the European Free Trade Association, and the UK fell 40.2% year-on-year to 8,837 units. The company’s market share shrank to 0.8% from 1.4% a year earlier, while sales from January to July dropped 33.6% year-on-year.
This decline came even as total battery EV sales in Europe rose 33.6% in July, now accounting for 15.6% of the European auto market. Petrol vehicles still hold the largest share at 28.3%, followed by hybrid EVs at 34.7%.
BYD outpaced Tesla with 13,503 units sold in July, securing a 1.2% market share. Analysts point to BYD’s hybrid lineup, which appeals to cost-sensitive buyers, as a key advantage despite high European tariffs on Chinese imports.
Tesla’s updated Model Y, launched earlier this year, failed to boost sales meaningfully. Increased competition from European automakers, who have aggressively expanded into EV production, further pressured Tesla’s performance.
Adding to challenges, Tesla’s brand image in Europe has suffered amid consumer boycotts linked to CEO Elon Musk’s endorsement of U.S. President Donald Trump and alleged ties with a German far-right party.
During Tesla’s Q2 earnings call in late July, Musk acknowledged the company faces “a few rough quarters,” citing the end of U.S. EV tax credits as another headwind. Still, he emphasized that artificial intelligence, autonomous driving, and robotics remain Tesla’s long-term growth drivers.
