Europe's July car sales saw the largest increase in 15 months, with BYD's market share surpassing Tesla

Driven by the surge in demand for pure electric and hybrid vehicles, the European automotive market achieved its largest increase in 15 months in July.

Data released by the European Automobile Manufacturers Association (ACEA) on Thursday showed that new car registrations in Europe increased by 5.9% year-on-year last month, reaching 1.09 million units, marking the fastest growth since April 2024. This growth injected momentum into the European automotive industry, which had been struggling after a significant decline in June.

By vehicle type, plug-in hybrid vehicles saw the most rapid increase, with sales soaring by 52% year-on-year; sales of pure electric vehicles also grew by more than one-third, achieving the best performance since January this year.

Notably, BYD's sales surged more than twofold, with a market share of 1.2%, marking its first inclusion in monthly sales statistics; while Tesla's sales plummeted by 40%, shrinking its market share to 0.8%.

Despite the recovery in sales data, European automakers still face multiple challenges, including supply chain disruptions from U.S. tariffs and intensified market competition. Meanwhile, industry executives have warned the EU that stringent environmental targets are unrealistic, adding more uncertainty to the electric vehicle strategies that major automakers will unveil at the upcoming Munich Motor Show.

Accelerating Electrification Transition, Hybrid Models Stand Out

The growth in European car sales in July was primarily driven by new energy vehicles.

Among them, plug-in hybrid vehicles saw the most significant increase, with sales skyrocketing by 52% year-on-year; sales of pure electric vehicles grew by 39.1%, achieving the best results since January this year.

However, traditional hybrid vehicles that do not require external charging still represent the largest single category in the European market, accounting for over one-third of new registrations. The combined sales of pure electric, hybrid, and plug-in hybrid vehicles increased by 39.1% year-on-year, collectively accounting for 59.8% of new car registrations, up from 51.1% in the same period last year.

Market performance varied significantly across countries. Germany saw an 11.1% increase in sales, while Spain, Poland, and Austria recorded growth rates of 17.1%, 16.5%, and 31.6%, respectively. However, sales in the UK, France, and Italy declined by 5%, 7.7%, and 5.1%, respectively.

Rise of Chinese Brands, Tesla's Share Continues to Shrink

By brand, traditional European automakers performed relatively steadily. Volkswagen and Ford both achieved double-digit growth, with registrations rising by 11.6% and 8.8%, respectively, while Stellantis Group's sales fell by 1.1%.

In terms of electric vehicles, BYD was included in the ACEA's monthly statistics for the first time, with sales skyrocketing by 225.3% in July, achieving a market share of 1.2%, surpassing Tesla to become an important player in the European electric vehicle market.

Tesla continued its downward trend, with sales in July declining by 40.2% year-on-year, and its market share shrinking from 1.4% in the same period last year to 0.8%, marking the seventh consecutive month of market share decline for the company.

The rapid rise of Chinese brands in the European market is forcing local automakers like Volkswagen to accelerate the launch of new models to remain competitive in the growing electric vehicle market while ensuring compliance with EU regulations that encourage electric vehicle adoption

Trade and Regulatory Pressures Coexist

Despite a rebound in sales, the European automotive industry still faces multiple headwinds.

The tariff policies implemented by Trump continue to disrupt the industry's supply chain, leading several automakers to issue profit warnings. Additionally, the industry has expressed concerns over the EU's aggressive environmental targets.

According to Reuters, Ola Kaellenius, CEO of the European Automobile Manufacturers Association, co-signed a letter to the President of the European Commission this Wednesday, stating that the EU's set targets for reducing carbon dioxide emissions from cars, including a ban on 100% zero emissions for new cars by 2035, "are no longer feasible."

In response, the European Commission has shown some flexibility, granting automakers a three-year grace period for the stricter carbon dioxide emission targets originally set to take effect this year.

In terms of geopolitical and trade friction, Bloomberg reported this week that the EU will seek to expedite legislation to eliminate tariffs on all U.S. industrial goods. This is a key demand put forth by Trump, who has linked this move to a commitment to reduce the current tariff level of up to 27.5% on EU automobiles.

Some countries are attempting to stimulate demand for electric vehicles by restoring or extending subsidies. For example, after ending subsidies for private buyers three years ago, the UK has now reintroduced a car purchase grant of up to £3,750. Due to consumers waiting for the list of eligible models to be announced, there was a period of hesitation in electric vehicle purchases in the UK last month