Data released by the European Automobile Manufacturers Association (ACEA) shows that new car registrations in the EU dropped 3.9% YoY last month. Hybrid-electric cars are the most popular powertrain across the bloc, capturing 38.6% of all registrations, while petrol and diesel models continued to lose ground.
However, Tesla’s market share among battery-electric vehicles (BEVs) dropped from 1.0% to 0.8% in 12 months. This underscores the intensifying competition in the segment once dominated by the Elon Musk-owned American manufacturer.
New Car Registrations Fall 3.9% YoY in Europe, Petrol Models Hardest Hit, BEV Market Share Grows
While BEVs expanded their market share from 14.9% in January 2025 to 19.3% this year, European manufacturers are struggling to compete with cheaper Chinese models that are flooding the market. Legacy brands like Volkswagen, Audi, Mercedes, BMW, and Renault are grappling with delayed decarbonization efforts and also navigating an uncertain global trade environment after President Trump’s IEEPA tariffs were ruled unlawful by the Supreme Court of the United States in a 6-3 decision on Friday.
ACEA data showed January car sales in the European Union, Britain, Switzerland, Norway, and Iceland fell 3.5% to 961,382. Registrations of petrol models fell 26% compared to this time last year, with dramatic declines seen in France and Germany, dropping 49% and 30%, respectively. Italy and Spain both saw drops of 22% and 25%. Petrol cars now account for only 22% of the European market, down from nearly 30% just a year ago.
On the other hand, battery-electric, plug-in hybrid, and hybrid-electric car registrations went up from 59% last year to 69% in January 2026. BYD saw sales surge by 165%, while registrations of models from industry powerhouses like Volkswagen, BMW, Renault, and Toyota fell 3.8%, 5.7%, and 13.4%, respectively. However, Stellantis and Mercedes recorded gains during the month.
Tesla’s European Sales Drop Amid Rising Market Competition
While the overall EV market across the Eurozone grew by 14% last month, Tesla registration fell by 17%, marking the 13th consecutive month of shrinking sales on the continent. In January, the American EV giant sold 8,075 cars, down from 9,733 during the previous year, representing a 17% year-on-year decrease in registrations. In France and the Netherlands, sales fell by 42% and 67%.
Another catalyst is the abrupt end of EV incentives in countries like Germany and Norway, leading to the market cooling naturally for Tesla’s offerings, which are now priced higher for the average family. Many consumers are holding off on purchases until more affordable models slated for late 2026 arrive.
Chinese manufacturers are filling the vacuum created by cooling overall demand by offering high-tech, electrified vehicles at price points that undercut both Tesla and European incumbents. Brands like BYD, MG, and Leapmotor are rapidly capturing the budget-conscious buyers’ market.
Tesla’s Model 3 and Model Y are still heavy hitters, but they are viewed as old compared to the latest models from BMW, Volkswagen, Audi, BYD, and MG, which have upped the ante in the software and range arms.
Industry analysts also pointed to “brand fatigue”, as European buyers often prioritize social and environmental values, and Tesla CEO Elon Musk’s polarizing political view is reportedly alienating a significant portion of his customers.
Tesla Inc. (NASDAQ: TSLA) closed Monday’s session at $399.83.
