European car sales rebound as Tesla stalls and BYD races ahead

European car sales picked up pace in July, rising 5.9 percent year-on-year to 1.09 million vehicles across the EU, UK and EFTA, according to industry data. The rebound was driven by strong demand in Germany, where registrations rose 11.1 percent, alongside surges in Spain, Poland and Austria.

Behind the headline recovery, however, the latest figures reveal a marked reshaping of the electric vehicle landscape. Tesla’s European sales collapsed by 40.2 percent compared with July last year, falling to 8,837 units. Its market share slipped to 0.8 percent from 1.4 percent, with declines particularly steep in Germany and the UK, where sales dropped by more than half.

The company has responded by cutting monthly lease fees by up to 40 percent in Britain, seeking to clear excess stock. Despite a recent update to its Model Y, Tesla has struggled to keep pace with growing competition and changing consumer sentiment.

China’s BYD, meanwhile, surged into the spotlight. Its European sales jumped 225 percent year-on-year to 13,503 units, capturing a 1.2 percent market share and overtaking Tesla in the process. BYD’s strategy of offering both hybrids and battery-electric vehicles has allowed it to compete effectively on price and appeal to cost-conscious buyers, particularly in markets sensitive to tariffs.

Traditional European manufacturers recorded mixed results. Volkswagen’s registrations climbed 11.6 percent in July, while Renault rose 8.8 percent. Stellantis, which includes Peugeot, Fiat and Citroën, delivered flatter results. At the same time, carmakers continue to press Brussels for flexibility on emissions targets, warning of cost pressures as the EV transition accelerates.

Across the market, electric and hybrid vehicles now account for nearly 60 percent of new registrations, up from just over half a year ago. Hybrids led the way with around 35 percent of the total, while battery-electric vehicles represented 15.6 percent.

The European car market’s return to growth masks deeper structural shifts. With Tesla losing ground, BYD gaining traction, and incumbents navigating tighter regulation, the competitive order in Europe is being redrawn around electrification.