Tesla’s (TSLA) dominance in Europe is fading fast. In July 2025, its sales in France plunged nearly 27%—one of its steepest monthly declines yet. Once an EV frontrunner, Tesla is now clearly struggling to keep up. Chinese competitors like BYD (BYDDY) are racing ahead, and local automakers are also pushing back hard.
What once felt like unstoppable momentum, Musk’s Tesla has turned into a scramble to retain market share. Europe’s EV market is now the most competitive in the world, and Tesla is feeling the heat.
A CNBC report highlighted that,
“Data published by the U.K.’s Society of Motor Manufacturers and Traders (SMMT) showed Tesla’s new car sales dropped by nearly 60% to 987 units last month, down from 2,462 a year ago.”
Tesla’s European Market Share Continues to Shrink
According to the European Automobile Manufacturers Association, Tesla’s market share in the EU, U.K., and EFTA dropped to 2.8% in June, down from 3.4% the previous year.
The company sold 34,781 vehicles across the region that month, which is a 22.9% year-on-year drop. Also in July, its sales in France plunged by nearly 27%, marking one of its steepest monthly drops yet.
The above data tells that Tesla is facing severe headwinds across Europe, with sales falling in most major markets despite the launch of an updated Model Y. According to Reuters, Tesla’s new car registrations in:
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Sweden fell 86%
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Denmark dropped 52%
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Netherlands sank 62%
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Belgium declined 58%
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Italy slipped 5%
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Portugal slid 49%
The only bright spots were Norway and Spain, where Tesla saw gains of 83% and 27%, respectively. Norway’s spike followed the rollout of 0% interest loans on Tesla models, while Spain’s surge coincided with a 155% jump in sales of all electrified cars.
The chart below also tells us that Tesla is losing ground in Europe.
Model Y Revamp Fails to Lift Sales
Tesla had pinned hopes on its refreshed Model Y, which began selling in March 2025 in Europe. However, the update has failed to spark meaningful growth. According to analyst Felipe Munoz from JATO Dynamics, the updated Model Y “has so far failed to provide the expected sales boost.”
Even in Tesla-stronghold Sweden, Model Y registrations fell 88% in July. In Denmark, they dropped 49%. By contrast, Norway saw a resurgence, with Model Y registrations jumping fourfold to 715 units due to financing incentives.
Here’s how Tesla (TSLA) performed in Q2 2025.
- SEE DETAILS: TSLA Stock Drops on Weak Q2 2025 Earnings: Tesla Faces Carbon Credit, Margin, and Political Risks
Pricing Strategy and Margins Under Pressure
To stay competitive, Tesla has slashed prices across Europe, often undercutting its margins. In France, the company’s market share fell from 1.6% in 2024 to just 0.9% in 2025, with buyers turning to local brands like Renault, which outsold Tesla’s Model Y with its new Renault 5 model in June.
Aggressive discounting might stimulate demand in the short term, but it signals waning pricing power, a worrying trend for a brand that once commanded premium status.
Tight Rules Stall Tesla’s Self-Driving Push in Europe
Another pain point for Tesla in Europe is the region’s strict autonomous driving regulations. While Tesla’s supervised self-driving feature is a major selling point in the U.S., it’s not fully available in many European countries due to tighter rules.
Musk acknowledged in July that the company could have “a few rough quarters” ahead as it waits for approvals and ramps up production of a new, more affordable EV model.
Tesla’s efforts to diversify include a trial robotaxi service in Austin, Texas, using autonomous Model Y vehicles. However, this program is not yet authorized for widespread deployment in Europe.
BYD Steals the Spotlight in Major European Markets
While Tesla stumbled, Chinese EV giant BYD roared ahead. In Spain, BYD sold 2,158 cars in July, nearly 8X more than the same month last year.
- In the UK, BYD registered 3,184 vehicles, quadrupling its year-over-year numbers. And in Germany, BYD posted a 390% increase in July sales.
BYD’s affordability, growing dealership network, and product variety have helped it attract European buyers seeking alternatives to Tesla.
- Notably, BYD overtook Tesla in overall European EV sales as early as April 2025, a trend that now looks firmly established.
Smart Pricing, Sharp Growth
BYD’s strategy of affordable pricing and rapid expansion is paying off. Models like the Dolphin Surf (globally known as the Seagull) and the Seal U are leading the charge. The Seal U tied as Europe’s best-selling PHEV in June.
Looking ahead, BYD plans to expand into 12 more European countries by the end of 2025. The company is also preparing to launch local production in Hungary, helping it reduce costs, navigate EU tariffs, and better compete with local and global rivals.
Chinese Brands Make Their Mark
The impact goes beyond BYD. Chinese EV makers, led by BYD, have nearly doubled their collective market share in Europe — from 2.7% in early 2024 to 5.1% in the first half of 2025. This surge reflects the growing influence of Chinese automakers across the European auto market.
Broader EV Market Still Growing—But Tesla Lags Behind
It’s important to note that Tesla’s slump comes at a time when overall EV demand in Europe is still rising. In July:
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Denmark’s overall car sales rose 20%
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Sweden was up 6%
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Norway surged 48%
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Spain grew 17%
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Portugal jumped 21%
This makes Tesla’s performance look even worse in comparison. The EV pioneer is not suffering from market decline, but rather losing ground to faster-moving rivals like BYD, Volkswagen, and Renault.
Elon Musk’s Controversies Add Fuel to the Fire
Aside from market dynamics, Tesla is battling reputational damage, much of it tied to CEO Elon Musk. His endorsement of Germany’s far-right AfD party and anti-union comments sparked protests at Tesla showrooms across Europe.
The backlash has been especially strong in Germany, where labor unions and political parties wield significant influence. Tesla’s sales in the country dropped 55% in July, with only 1,110 units sold compared to 2,469 a year ago. From January to July, Tesla’s total German sales plunged 57.8% to just 10,000 units.
In Britain, Tesla’s July sales fell 60%, while BYD’s more than quadrupled.
Legacy Automakers Also Feel the Heat
Tesla isn’t the only automaker feeling the squeeze. European giants like Volkswagen, BMW, Mercedes-Benz, Stellantis, and Renault all posted weak Q2 results, citing falling demand and concerns over U.S. import tariffs.
However, these companies are still expanding their EV offerings and investing in local supply chains, unlike Tesla, which continues to rely heavily on exports and centralized production.
What Lies Ahead?
Tesla’s roadmap includes a more affordable EV model and the potential expansion of its Berlin Gigafactory’s output. But until production ramps up and autonomous features are approved in Europe, Tesla may continue to struggle.
In contrast, BYD and other Chinese players are gaining speed, price advantage, and regulatory momentum, making them serious threats to Tesla’s European ambitions.
Tesla’s 27% sales crash in France shows that the much-touted EV leader is on the defensive in a region once crucial to its global strategy. Concisely, unless Tesla adjusts its pricing, updates its lineup more frequently, and repairs its brand reputation, it may continue to lose ground to BYD and others.
The post BYD (BYDDY) Beats Tesla (TSLA) in Europe: The EV Shift No One Saw Coming appeared first on Carbon Credits.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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