Tesla’s Sales Slump in Europe as Chinese EV Rivals Gain Ground

Tesla (NASDAQ:TSLA) is losing traction in the European market, with new vehicle registrations plunging 27.9% year-over-year in May, even as demand for fully electric vehicles continues to climb across the continent.

The American EV giant saw its European market share shrink to just 1.2% last month, down from 1.8% a year earlier — marking its fifth consecutive monthly decline. The downturn comes amid rising interest in lower-cost electric models from Chinese automakers and growing unease among consumers over CEO Elon Musk’s polarizing political remarks.

Industry data from the European Automobile Manufacturers Association shows overall vehicle sales in Europe rose by 1.9% in May to 1.11 million units, bouncing back after a small dip in April.

Despite recently imposed EU tariffs on Chinese-made EVs, manufacturers from China are making notable inroads. In May alone, they sold over 65,800 vehicles, nearly doubling their market share to 5.9%, according to Jato Dynamics. BYD (USOTC:BYDDY) came close to matching Tesla’s registration numbers for the month, after surpassing the U.S. company in April.

Tesla’s refreshed Model Y hasn’t yet turned the tide, as both legacy European carmakers and aggressive Chinese entrants race to expand their EV offerings amid rising trade tensions.

Among major brands, China’s SAIC Motor boosted registrations by 22.5%. German automaker BMW posted a 5.6% increase, while Japan’s Mazda suffered a sharp 23% drop.

Across the European Union, car sales are down 0.6% for the year so far. However, demand for electrified vehicles remains robust. Battery-electric registrations jumped 26.1% in May, plug-in hybrids rose 15%, and traditional hybrids gained 19.8%.

In total, 58.9% of new passenger car registrations in the EU last month were electrified — a significant leap from 48.9% a year earlier.

Looking at individual countries, Spain led the way with an 18.6% rise in new car sales, followed by Germany with a modest 1.2% gain. France and Italy saw declines of 12.3% and 0.1%, respectively. The UK posted a 1.6% uptick.