Tesla Inc. continues to post steep sales declines in Europe’s biggest electric vehicle markets, where the Elon Musk-led automaker is ceding significant share to China’s BYD Co.

Tesla Inc.’s rough stretch in Europe continued as data from Germany and the U.K. showed the U.S.-based electric-vehicle maker’s sales were cut in half last month.

Data last week showed registrations of new Tesla cars in several key European markets fell in July, despite a revamp to its signature Model Y, as the EV maker struggles with a backlash against CEO Elon Musk's political views, regulatory challenges and ...