China’s BYD is taking over Europe as Tesla sales slump continues

The European electric vehicle (EV) market is shifting, and an unexpected leader is emerging. Chinese automaker BYD has officially surpassed Tesla in monthly sales, cementing its position as a dominant force in the region.

According to new data from the European Automobile Manufacturers Association (ACEA), Tesla's sales in Europe plummeted by a staggering 40% in July compared to the previous year, marking the seventh consecutive month of decline. In stark contrast, BYD's sales more than tripled, putting it ahead of its American rival.

The numbers reveal a changing landscape where BYD's strategy of offering a wider range of affordable, competitively priced models is winning over European consumers. While the overall EV market in Europe continues to grow, Tesla is shrinking within that growth.

A tale of two strategies

Analysts point to several factors behind the diverging fortunes of the two companies:

• BYD's broad lineup: BYD has rapidly expanded its presence with a diverse range of vehicles, including the popular Dolphin, Atto 3, and Seagull, which cater to a wider array of price points and consumer needs. This is in contrast to Tesla's aging lineup, which has not seen a major refresh in years. BYD's focus on both battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs) has also given it a key advantage, especially in markets where charging infrastructure is still developing.

• Pricing power: BYD's vertical integration, from battery production to finished vehicle manufacturing, allows it to offer its vehicles at highly competitive prices. This has put immense pressure on Tesla, which has been forced to offer significant price cuts, impacting its profit margins.

• Brand reputation and leadership: Analysts and commentators have also pointed to potential reputational damage for Tesla in Europe, with some consumers reportedly turned off by CEO Elon Musk's public rhetoric and political stances.

BYD’s strategic expansion into Europe, which began in earnest in late 2022, has included forming partnerships with local dealers and a significant investment in a new production facility in Hungary, which is set to begin production later this year.

This localized approach is designed to mitigate the impact of EU tariffs and strengthen its foothold in the region.

The end of Tesla in Europe?

The decline of Tesla, once the undisputed leader in Europe's EV market, serves as a cautionary tale for companies in a fast-evolving and fiercely competitive industry. While Tesla has announced plans for a more affordable EV in the second half of 2025, it is now playing catch-up to a new wave of aggressive and well-funded rivals from China.