The European car market is recovering, but Tesla's sales have plummeted by 40%, and its market share has been surpassed by BYD

According to the latest statistics released by the European Automobile Manufacturers Association on Thursday, new car sales in Europe increased by 5.9% year-on-year in July, mainly due to strong demand growth in the German market offsetting the negative impact of declining demand in the UK, France, and Italy.

Although overall electric vehicle sales in the European market have risen, the market share of US electric vehicle giant Tesla (TSLA.US) in Europe has seen a "dramatic decline" for seven consecutive months. In July, Tesla's new car sales in Europe plummeted by over 40%, falling behind its Chinese electric vehicle competitor BYD, which was included in the monthly sales data for the European market for the first time.

Statistics on electric vehicles in the European market show that in July this year, under the European monthly statistical scope (including EU + UK + EFTA), BYD's market share in Europe was 1.2%, surpassing Tesla's approximately 0.8%, thus leading Tesla in market share for that month.

In recent years, large European automakers such as Volkswagen have been studying the launch of new electric vehicle models to fend off Tesla and electric vehicle competitors from China in the increasingly growing electric vehicle market in Europe, while profitably complying with regulatory requirements encouraging European automakers to promote electric vehicles.

Ola Kaellenius, CEO of the European Automobile Manufacturers Association (ACEA), co-signed a letter to European Commission President Ursula von der Leyen on Wednesday, stating that the EU's targets for reducing carbon dioxide emissions from vehicles in Europe (including a 100% reduction in passenger car emissions by 2035) are no longer feasible.

It is understood that European automakers have collectively accounted for billions of dollars in losses, and companies like Renault have issued profit warnings. Several European automakers mentioned the significant negative impact of US import tariffs in their latest financial reports, making it difficult for these European automotive leaders to achieve profitability.

Overview of the latest data on the European automotive market

ACEA statistics show that in July, the overall new car sales in Europe, including the EU, the UK, and the European Free Trade Association (EU + UK + EFTA), rose to 1.09 million units.

Among them, new car registrations for Volkswagen and Renault increased by 11.6% and 8.8% year-on-year, respectively, while Stellantis unexpectedly declined by 1.1%.

Tesla, which focuses on pure electric vehicles, saw its sales drop significantly by 40.2% year-on-year that month, with its market share in Europe severely compressed from 1.4% a year ago to 0.8%. Similarly, BYD, one of Tesla's biggest competitors focused on electric vehicles, saw its overall monthly sales in Europe surge by 225.3%, reaching a market share of 1.2%.

Overall car sales in EU countries increased by 7.4% year-on-year. New registrations for pure electric, hybrid, and plug-in hybrid vehicles grew by 39.1%, 56.9%, and 14.3% year-on-year, respectively, accounting for approximately 59.8% of EU registrations, up from 51.1% in July 2024

Germany's overall automobile sales achieved a year-on-year growth of 11.1% in July, while the UK market declined by 5%, France by 7.7%, and Italy by 5.1%. The overall automobile sales growth in Spain, Poland, and Austria was 17.1%, 16.5%, and 31.6%, respectively.

Tesla continues to experience a "major defeat" in the European market

Despite significant improvements to its iconic global model, the Model Y, electric vehicle leader Tesla saw a substantial decline in new car registrations in several key European markets in July, highlighting the challenges the American electric vehicle manufacturer faces due to CEO Elon Musk's aggressive political stance on Europe, regulatory challenges regarding autonomous driving, and increasingly fierce competition in the electric vehicle market.

Tesla's aging electric vehicle product lineup is facing a wave of low-cost electric vehicle competitors, particularly from Chinese electric vehicle rivals. The electric vehicle leader is launching a revamped Model Y and beginning production of a cheaper new model, but the output of the revamped electric vehicle model will not significantly increase until the next quarter, later than initially expected.

Before the last three months of this year, Tesla is not expected to launch more affordable entry-level electric vehicle models, and the $7,500 tax credit for car purchases in the U.S. is about to expire. Musk acknowledged in July that Tesla may face "a few very tough quarters."

He stated that the exceptionally strict autonomous driving regulations from European regulators make it more difficult for the Model Y to achieve sales growth in certain countries and promote the subscription of the FSD (Full Self-Driving) service. In some European markets, the optional supervised autonomous driving system for the Tesla Model Y is "a major selling point."