Tesla’s European sales fell for a 13th straight month in January, while Chinese rival BYD posted a 165% surge in registrations, underscoring a sharp shift in the region’s EV market.
Tesla recorded its 13th consecutive month of declining sales in Europe in January, as intensifying competition and brand headwinds weighed on performance, according to fresh industry data.
Figures released Tuesday by the European Automobile Manufacturers Association (ACEA) show Tesla registered 8,075 new vehicles across the European Union, Britain, Switzerland, Norway, and Iceland in January, down 17% year-on-year. Its regional market share slipped to 0.8%, from 1% in the same month last year.
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The data mark what analysts describe as another subdued start to the year for the company, which once dominated Europe’s battery-electric vehicle (BEV) segment.
Rico Luman, senior sector economist for transport and logistics at Dutch bank ING, characterized the results as a “very weak” opening to 2026, citing a combination of intensifying competition and product cycle stagnation.
European consumers now face a broader range of affordable EVs, including models from BYD as well as brands such as MG and ZEEKR. The expansion of lower-priced offerings has coincided with Tesla’s limited rollout of new mass-market models in Europe.
“Tesla’s image has deteriorated in Europe last year and people have much more choice now with the range of new affordable EVs entering the market, while Tesla lacks new models,” Luman said.
He added that Tesla’s strategic focus on autonomous driving technology, rather than frequent model refreshes, may also be affecting demand in a market where product updates and pricing adjustments drive volume.
Compounding the challenge is the secondary market dynamic. A large cohort of first-generation Tesla vehicles, leased between four and six years ago, is now being remarketed. The influx has pushed down used prices, increasing supply and potentially cannibalizing demand for new vehicles.
“There’s an abundance of competitively priced Tesla’s available on the used market,” Luman noted.
Brand and Political Overhang
Tesla’s European operations have also navigated reputational pressures tied to Chief Executive Elon Musk’s political engagement. Musk spent nearly $300 million supporting President Donald Trump’s re-election campaign and later led a high-profile initiative to reduce the size of federal agencies.
At the height of Musk’s involvement with the White House, protests took place at Tesla dealerships across parts of Europe. While Musk’s relationship with Trump later cooled following a public dispute, the episode added volatility to the company’s brand perception in markets where political alignment can influence consumer sentiment.
Europe’s EV buyers, particularly in northern and western markets, often factor environmental, governance, and corporate values into purchasing decisions, making brand equity a competitive variable.
BYD’s Expansion Gains Momentum
While Tesla contracted, BYD posted a sharp expansion. The Chinese automaker registered 18,242 vehicles in January, a 165% year-on-year increase, more than doubling its market share to 1.9% from 0.7% a year earlier.
The surge highlights a broader structural shift. Chinese EV manufacturers are rapidly scaling their European presence, leveraging vertically integrated supply chains and competitive pricing. Although U.S. trade policy has effectively barred Chinese EVs from the American market — including a 100% levy on imports — Europe remains comparatively open, albeit with evolving regulatory scrutiny.
BYD’s performance suggests European consumers are increasingly receptive to Chinese brands, particularly in the mid-range segment where price sensitivity is high.
The overall European auto market contracted modestly in January. Total registrations across the EU, Britain, and European Free Trade Association countries fell 3.5% to 961,382 vehicles.
Within that total, the composition of demand continues to shift. Petrol car registrations declined approximately 26% year-on-year. In contrast, battery-electric vehicles rose nearly 14%, plug-in hybrids climbed 32%, and hybrid-electric vehicles increased 6%.
The data underscore that electrification momentum remains intact, even as legacy internal combustion engine sales weaken. The competitive battle is therefore less about whether EV demand exists and more about which manufacturers capture that growth.
Currently, Europe presents both risk and opportunity for Tesla. The company operates a major manufacturing facility in Germany, which positions it to avoid certain import-related constraints and respond more flexibly to regional demand. However, sustaining growth may require refreshed product offerings, sharper pricing strategies, and brand recalibration in a crowded marketplace.
The prolonged decline in registrations signals that first-mover advantage is no longer sufficient. As Europe’s EV market matures, differentiation increasingly hinges on price competitiveness, model diversity, and localized marketing strategies.
January’s figures suggest that Tesla faces a recalibrated competitive market — where Chinese manufacturers are scaling quickly, and European consumers are exercising broader choice.