Tesla sales crash 40% in Europe as Chinese rival BYD roars ahead with 225% surge

Tesla’s dominance in the European electric vehicle market continued to loosen in July, with sales dropping 40% year-on-year, as Chinese challenger BYD posted explosive growth.

This is according to data from the European Automobile Manufacturers Association (ACEA) on Thursday.

The U.S. automaker registered just 8,837 new vehicles in July, marking its seventh straight month of decline. BYD, on the other hand, clocked 13,503 registrations, a 225% surge from the same period last year, overtaking Tesla in the race for European dominance.

What makes Tesla’s slump more striking is that it came despite overall EV sales rising across Europe, ACEA noted.

Musk’s woes deepen

Analysts say Tesla is struggling with multiple headwinds: stiff competition, an ageing product lineup, and reputational damage from CEO Elon Musk’s controversial rhetoric and political ties. The company has not introduced a major model refresh in years, while its much-hyped Cybertruck has failed to deliver the expected impact.

Global troubles add to the pain. Tesla’s auto sales revenue dipped in Q2, and Musk warned of “a few rough quarters” ahead. The firm has promised a cheaper mass-market EV by late 2025 to revive momentum, but for now, rivals are racing ahead.

“Tesla is trying to convince investors it’s more than a car company by talking AI, robotics, and autonomy,” said Thomas Besson, head of auto research at Kepler Cheuvreux to CNBC. “But the reality is its current models are ageing fast compared to competitors.”

Chinese manufacturers are aggressively expanding in Europe, luring buyers with competitive pricing and new models. BYD, the biggest threat, has opened showrooms across the continent and built a strong presence in less than two years.

Chinese brands now hold over 5% of Europe’s car market, a record high, according to JATO Dynamics.

Tesla is not alone in feeling the heat. Other major players like Stellantis, Hyundai, Toyota, and Suzuki also saw declines in July, while European automakers Volkswagen, BMW, and Renault recorded gains.