Tesla’s sales in Europe dropped by 40% in July, as Elon Musk’s electric vehicle manufacturer confronts stiffer competition from the Chinese company BYD.

In July, Tesla sold 8,837 cars across the EU and the UK, according to data from the European Association of Automobile Manufacturers (ACEA). This is down from 14,769 during the same month last year.

BYD’s car registrations surged to 13,503 last month, up from 4,151 a year earlier. Currently, BYD holds a market share of 1.2%, as reported by ACEA, while Tesla’s share stands at 0.8%.

Chinese automotive brands are actively expanding in Europe, often offering more affordable models. A report by market research firm Jato Dynamics noted that BYD surpassed Tesla in Europe earlier this spring.

In the UK, the government announced on Thursday that Ford would be the first manufacturer to receive subsidies of up to £3,750 for two of its models. An additional 26 models qualify for a £1,500 grant under the new electric vehicle subsidy initiative.

The grant is only applicable to vehicles priced at £37,000 or less, and discounts will be automatically applied at the point of sale.

Transport Secretary Heidi Alexander commented: “We’re making it easier and more affordable for families to transition to electric vehicles, with discounts of up to £3,750 on EVs.”

“Our efforts aim to foster competition in the UK EV market and drive economic growth, job creation, and skill development as part of our plan for change.”

Separately, the Automakers and Traders Association revealed that UK car production increased by 5.6% over the past two months in July.

However, SMMT CEO Mike Hawes described the current market conditions as challenging, citing “weak consumer trust, unstable trade flows, and significant investments in new technologies abroad.”

ACEA has also indicated that in the first seven months of 2025, 1.011 million new battery electric vehicles have been registered, which represents 15.6% of the EU market share.

Hybrid electric vehicle registrations have proven even more popular, with 2.255 million units recorded across the EU so far this year. This increase is largely attributed to growth in the four largest markets: France (30.5%), Spain (30.2%), Germany (10.7%), and Italy (9.4%).

ACEA Executive Director Sigrid de Vries emphasized the need to enhance the European uptake by “continuing to expand public charging infrastructure, lowering charging costs, and ensuring a well-structured incentive program for purchases.”