European auto sales began 2026 not with a surge, but with a notable decline. Overall registrations across the European Union, the United Kingdom and the European Free Trade Association (EFTA) area fell 3.5% compared to the same period last year, totaling 961,382 units. Within this broader contraction, a significant shift is underway: Tesla, once a pioneering force in the electric vehicle market, is facing substantial headwinds, while Chinese automotive giant BYD is experiencing rapid growth.
For the Palo Alto-based automaker, data from the European Automobile Manufacturers Association (ACEA) paints a concerning picture. Tesla registrations in Europe plummeted 17.0%, with just 8,075 vehicles delivered, resulting in a market share of only 0.8%. This marks the thirteenth consecutive month of declining sales. The challenges extend beyond Europe, with Tesla representing a mere 0.8% of the U.S. Market share.
Several factors are weighing on Tesla’s performance, including structural issues and reputational concerns. The company has discontinued sales of the Model S and Model X without immediately introducing successor models, and its Berlin factory has faced scrutiny over alleged toxic work conditions. These developments come as Tesla navigates a broader slowdown in the automotive sector.
Tesla’s Struggles
The decline in Tesla’s sales underscores the increasing competition within the EV market and the challenges of maintaining rapid growth. The company’s recent sales figures follow a reported 13% decrease in vehicle deliveries during the second quarter of 2025, and a 12% drop in revenue – the worst performance in a decade, according to reports. Elon Musk has acknowledged potential “difficult quarters” ahead and abandoned previously stated sales targets for 2025.
BYD’s Ascent
In contrast to Tesla’s struggles, BYD is experiencing a surge in popularity. Leveraging a combination of all-electric vehicles and plug-in hybrid models, the Chinese manufacturer recorded a remarkable 175% increase in European sales (165% including the EFTA area and the UK). With 18,242 vehicles sold, its market share rose to 1.9%, more than double that of Tesla. BYD has publicly stated its global ambitions and aims to further expand its presence in key markets.
The broader automotive landscape presents a mixed picture. The Volkswagen Group, while remaining the market leader with over 256,000 units, saw a 3.8% decrease in sales. Skoda bucked the trend with a 10.1% increase, while the Volkswagen brand itself experienced an 11.2% decline. Mini likewise performed well, with an 11.2% increase, anticipating a special edition Cooper S inspired by the 1965 Monte Carlo rally. Stellantis, grew by 6.7%, driven by strong performances from Fiat (+24.6%), Lancia/Chrysler (+22.0%), Citroën (+14.0%), and Opel/Vauxhall (+12.7%), despite declines from Peugeot (-2.9%), Jeep (-4.9%), and Alfa Romeo (-10.8%).
The Renault Group experienced a 15.0% decline, largely due to a 35% drop in Dacia sales, which offset gains from Renault (+4.4%) and Alpine (+65.2%). The Hyundai Group (-12.5%), Toyota (-11.8%), Ford (-13.1%), and Nissan (-17.8%) also reported declines. Even the premium segment felt the impact, with Lexus sales down 28.5% and Mitsubishi down 35.1%.
The Energy Transition Continues
Despite the challenges faced by individual brands, the shift towards electric vehicles continues. Battery electric vehicle (BEV) registrations increased by 13.9%, now accounting for 19.3% of the EU market. Plug-in hybrid vehicles saw a 32.2% jump, while gasoline and diesel engine sales continued their decline, falling 25.7% and 22.0% respectively.
France and Germany both experienced overall sales declines of 6.6%, but saw significant increases in EV registrations – 52.1% and 23.8% respectively. Norway, however, experienced a dramatic 76.3% drop in overall market volume, a direct result of the termination of government incentives. Tesla is also seeking a license to supply electricity to homes and businesses in the UK, potentially launching operations as early as 2026, according to reports. The company already operates in the energy market in Texas, allowing owners of its vehicles to resell excess energy.
