In July, Tesla's sales in the European market continued its downward trend since the beginning of this year.

Especially in major European countries, the performance is more prominent. Only 1110 cars were sold in the German market in July, a significant decrease of 55.1% compared to the same period last year; Looking at the timeline, the cumulative sales volume for the first seven months of this year was 10000 units, a decrease of 57.8% compared to the same period last year.

The UK market is also under pressure, with car registrations in July dropping by 60% from 2462 in the same period last year to 987.

In other major markets, France saw a 27% decrease in registration volume to 1307 vehicles in July, Sweden experienced a more significant decline at 86% with only 163 vehicles sold, and Belgium saw a 58% decrease to 460 vehicles.

At the Qatar Economic Forum in May, Musk said, "Tesla's sales in Europe have declined, and this situation applies to all car companies. There are no exceptions. Because the European economy is weak

But the fact seems to be different. Since the beginning of this year, the European new energy vehicle market has not only not been "weak", but has also shown signs of growth.

After experiencing a flat year in 2024, the European electric vehicle market continued to recover in the first half of 2025, achieving a year-on-year growth of 24%, increasing from 944858 vehicles in the first half of 2024 to 1177051 vehicles.

Unlike Tesla's downturn, the sales of Chinese brand electric cars have achieved synchronized growth with the market in Europe.

According to statistics from European institutions, in the first half of this year, Chinese tram brands sold 74296 vehicles in Europe, a year-on-year increase of nearly 20%, with a market share of about 8%; If we add the three acquired brands of Volvo, Lotus, and Polestar, the sales volume of Chinese tram brands in the first half of this year was 133549 units, with a market share of about 14.39%.

During this process, a historic breakthrough occurred: in April, BYD surpassed Tesla in electric vehicle sales in the European market for the first time. BYD added 7231 new registered sales of electric vehicles in the month, a year-on-year increase of 169%. If plug-in hybrid vehicles are included in the statistics, the total sales have jumped by 359%.

Foreign media commented that this is a watershed for the European electric vehicle market.

Tesla steps down Behind the European electric vehicle sales champion

Why did Tesla, which dominates the electric vehicle market with disruptive innovation and strong sales, encounter consecutive sales Waterloo in the once champion European market?

One is the controversy surrounding CEO Musk's political stance. Europeans strongly dislike its deep ties with Trump and support for the far right Alternative Party in Germany, and negative emotions have spread to car consumption.

In June, relevant research showed that consumers' favorability towards Musk decreased by 26%, their favorability towards the Tesla brand decreased by 32%, and the likelihood of purchasing Tesla in the future decreased by 32%.

More importantly, Tesla, which claims to excel in "disruptive innovation," has not surprised the market for a long time.

Taking the best-selling model Model Y as an example, since its launch in 2020, it has undergone several years of market testing but has not received any major updates; The Model 3 was launched in 2017 and only received a minor facelift in 2024.

In the fiercely competitive new energy vehicle market, the aging product matrix directly leads to the loss of the favor of some potential consumers.

Despite Tesla's mid-term facelift of the Model Y, its design language has yet to shake off the shadow of the "inflated Model 3" and has failed to boost lost sales.

At the same time, competitors are catching up and rapidly eroding their market share. Competitors such as the Volkswagen ID.7 and BYD Han EV have successfully completed iterative upgrades and achieved breakthroughs in key performance indicators; In the field of intelligent driving, BYD has lowered its intelligent assisted driving technology to the 10000 yuan market through its large-scale "intelligent driving equality" strategy.

In addition, factors such as lagging charging infrastructure and fluctuating energy prices have led European consumers to prefer plug-in hybrid and extended range vehicles, while Tesla only produces pure electric vehicles, which has also resulted in its loss of this market segment.

The decline in sales directly threatens Tesla's financial health, as the capacity utilization rate of the Berlin Gigafactory is severely insufficient, resulting in ineffective allocation of fixed costs.

Therefore, Tesla has re examined the importance of its European business, and CEO Musk recently announced that he will personally take over the sales business in the European and American markets.

In order to enhance Musk's extensive focus on Tesla's business landscape, interests, and other matters that may distract his time and energy, Tesla approved a special equity incentive plan on August 3, giving Musk more Tesla equity. The reward will be awarded on the second anniversary of the grant date, provided that Musk still serves as CEO or executive responsible for product development and operations at that time.

At the product level, Tesla's "affordable cars" that have repeatedly skipped tickets have returned to the public eye. During the second quarter financial report, Musk reiterated his plan to launch a new model within the year, stating that it "looks like Model Y." The model started production in June and will gradually increase production in the coming quarters. It is expected to be officially launched in the fourth quarter.

Multi party competition New changes in the fertile soil pattern of Europe

It is currently unknown whether Tesla's sales rescue plan will succeed in the European market, but a market trend can be seen that Tesla's declining sales are causing a reshaping of the European new energy vehicle market.

It is necessary to make a clear judgment here - the European market is still a fertile ground for new energy vehicles.

Previously, in mid to late June, Audi and Mercedes Benz extended their fuel vehicle service plans, abandoned their original full electrification schedule, and the July 2 EU 2040 greenhouse gas emissions reduction proposal shrank compared to expectations, which led to market criticism of the European new energy vehicle market.

But looking at the essence through the phenomenon, these adjustments are not a denial of the electrification transformation, but a rational response made by car companies to the aggressive electrification timetable under the challenges of high energy costs, strong competition between Chinese and American car companies squeezing market space, and fluctuations in consumer acceptance after subsidy reduction.

But this does not negate the general direction of electrification. From the underlying logic of the EU climate policy, the core goal of emissions reduction remains unchanged, and phasing out gasoline vehicles is still an inevitable path to achieving carbon neutrality.

The fluctuation of the external environment has forced car companies to shift from "radical and aggressive" to "steady progress", seeking a balance between policy rigidity and market flexibility. This strategic adjustment has made the pace of Europe's electrification transformation more in line with the actual environment, avoiding possible setbacks caused by radical and aggressive actions.

Under these preconditions, let's take a look at the competitive situation presented by the European new energy market:

Camp 1: European domestic car companies continue to make efforts Volkswagen Group has become the new electric vehicle sales champion in Europe with over 130000 units sold and a year-on-year growth of 78%. Its Cupra brand has achieved significant growth through a combination of electrification and youthfulness strategies; Luxury brands such as BMW and Mercedes Benz are pushing for electric vehicles by lowering prices, seizing Tesla's high-end market share.

Camp 2: Chinese car companies are accelerating their penetration by leveraging their technological and cost-effective advantages. As mentioned above, BYD's sales in Europe will grow rapidly in the first quarter of 2025, with pure electric sales surpassing Tesla for the first time in April, and leading in core markets such as Germany, the United Kingdom, and France; The MG brand under SAIC also achieved double-digit growth.

Camp 3: In contrast, Japanese and Korean car companies have performed relatively flat. Hyundai and Kia saw a slight decline in sales in May, with Korean brands showing an overall downward trend. Japanese brands also experienced a decline in sales during the same period, but they did not give up. Hyundai Kia continues to develop new energy technologies to improve range and intelligent configurations, while Japanese car companies are trying to find breakthroughs through the accumulation of hybrid technology.

At present, the European new energy vehicle market is in a critical period of restructuring. Tesla's shrinking market share provides opportunities for various parties. European domestic car companies rely on their heritage and localization advantages to consolidate their position, Chinese car companies accelerate their expansion with technology and cost-effectiveness, and Japanese and Korean car companies seek breakthroughs in adjustment.

The final pattern will depend on whether the product layout, technological innovation, and market strategy of each car company can accurately adapt to the changes in the European market.