Tesla Continues To Battle Slowing Sales in Europe As BYD Outsells It For Second Month

Tesla (NYSE: TSLA) experienced a significant sales decline in Europe during August, contrasting sharply with the overall growth in the region’s electric vehicle (EV) market. It was the eighth consecutive month when the Elon Musk-run company’s sales fell in Europe as it continues to lose market share to both European and Chinese players.

Data from the European Automobile Manufacturers’ Association (ACEA) showed that Tesla registrations fell 36.6% year-over-year in the EU last month to a mere 8,220 units, while its market share dropped to only 1.2%. In the first eight months of the year, the company’s sales in the region fell 32.6%.

BYD Sold More Cars Than Tesla in Europe Last Month

BYD has been particularly taking market share in Europe, and its sales more than tripled in August. The Chinese auto giant outsold Tesla for the second consecutive month and held a 1.3% market share.

Tesla has been in Europe for quite some time now and even has a Gigafactory in Germany. BYD, on the other hand, officially entered the European market in 2022 and has now surpassed Tesla’s sales, despite facing tariffs in the EU.

Notably, BYD surpassed Tesla’s total sales in 2022, even as the US EV giant retained the title of the biggest seller of battery electric vehicles (BEVs). It hit yet another milestone when its 2024 revenues surpassed those of Tesla. BYD’s annual revenues rose 29% YoY to $107 billion last year, while Tesla’s revenues were around $97.7 billion. The steep rise in BYD’s sales was led by a record 4.27 million deliveries, which was well ahead of Tesla, which reported a YoY fall in its 2024 deliveries – the first in the company’s history. The sales decline has worsened in the first half of the year, with Tesla’s shipments down in double digits.

BYD Looks Set to Become Biggest EV Seller in 2025

BYD, meanwhile, has continued its strong growth trajectory, selling more BEVs than Tesla in the first six months of the year. Looking at the strong growth in the first six months of the year, BYD looks set to become the world’s biggest seller of BEVs in 2025 and hit yet another milestone even as it has reportedly toned down its ambitious target of selling 5.5 million cars this year.

Notably, in 2011, Tesla CEO Elon Musk laughed at the possibility of BYD becoming a competitor to Tesla. However, the Chinese company has proven critics wrong and has emerged as a serious competitor to Tesla, not only in China but also in global markets.

Musk, too, has changed his mind about BYD, and in 2023, he praised the company, terming it “highly competitive.”

Musk has been all praise for Chinese EV companies and, during Tesla’s Q4 2023 earnings call, said, “Frankly, I think, if there are not trade barriers established, they will pretty much demolish most other companies in the world.”

The billionaire added, “The Chinese car companies are the most competitive car companies in the world. So, I think they will have significant success outside of China depending on what kind of tariffs or trade barriers are established.”

Musk’s Politics Is Hurting Tesla

Along with the slowing growth in the EV industry and rising competition, Musk’s political activities are also hurting Tesla, particularly in the US and Europe. The Cybertruck is a case in point here, as the model’s unique shape made it the target of those protesting against Musk.

Musk’s embrace of right-wing parties in Europe has also alienated some buyers. Protests and public backlash in several European cities, coupled with concerns over his political endorsements, have created a reputational headwind that is proving difficult to overcome. In a market where consumers are increasingly conscious of corporate values and social responsibility, Musk’s actions appear to be directly impacting the brand’s appeal.

In a related incident, earlier this year, 10 drivers in Paris filed a lawsuit against Tesla, alleging that the perception about its cars becoming political symbols “prevents them from fully enjoying their car.”

Tesla Proposed a New Pay Package for Musk

Meanwhile, Tesla has unveiled a new pay package for Musk that could be worth a staggering $1 trillion. The proposal, which will be put to a shareholder vote on November 6, could make him the world’s first trillionaire if fully achieved.

The new plan is a direct response to the ongoing legal challenges surrounding Musk’s 2018 compensation package, which a Delaware court has twice revoked. Despite shareholders voting to reinstate that deal in June 2024, the legal battles prompted Tesla’s board to create a new framework to ensure Musk remains “eager” and “focused” on the company’s long-term vision.

The compensation would be awarded in a series of tranches, with each payout contingent on a combination of market capitalization and operational milestones. To receive any of the shares, Musk would need to remain with the company for at least 7.5 years, with the full package requiring a 10-year commitment.

Musk’s Ownership Stake Could Rise

If approved by shareholders, the plan could increase Musk’s ownership stake in Tesla to over 25%, significantly consolidating his control over the company. Notably, in a post on X in January 2024, Musk said that “I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned.”

Currently, Musk owns around a 13% stake in Tesla, and his ownership fell after he sold shares to fund his Twitter acquisition. His public call for higher voting rights in Tesla was seen as a ploy to pressure Tesla’s board for a new compensation structure.

More recently, during Tesla’s Q2 2025 earnings call last month, Musk said that he hoped that the issue of his having higher voting rights would be taken up at the upcoming shareholder meeting.

“I don’t want to find that I’ve got like so little control that I can easily be ousted by activist shareholders after having this army of humanoid robots. I think as I’ve mentioned before, I think my control over Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy,” said Musk during the earnings call.