By Greta Rosen Fondahn and Alessandro Parodi

(Reuters) - Tesla's new car sales in Europe dropped 28.2% in March from a year earlier, even as overall battery electric vehicle sales rose 23.6% in the month, according to data from the European Automobile Manufacturers Association (ACEA).

Total new car sales in Europe rose 2.8% in the month, boosted by double-digit jumps in Britain and Spain, as EV gains offset a fall for petrol and diesel cars, the data showed.

WHY IT'S IMPORTANT

Tesla's sales drop in Europe adds to signs that drivers are shunning Elon Musk's electric car brand as competition from China stiffens and some protest against his political views.

European carmakers are also fighting competition from China, while battling to bring down high costs in home markets and now grappling with the effects of U.S. President Donald Trump's 25% tariffs on auto imports, clouding the outlook for the industry. 

Trump's 145% import taxes on Chinese imports - and Beijing's retaliatory tariffs - have also pushed global growth forecasts lower, raising new risks for automotive companies.

BY THE NUMBERS 

March sales in the European Union, Britain and the European Free Trade Association rose to 1.42 million cars, after falling for two months, the ACEA data showed. 

Registrations at Volkswagen and Renault increased by 10.3% and 13.0% respectively, while they fell by 5.9% at Stellantis.

Tesla's sales fell for a third month, down 28.2% year-on-year, and its share of the total market declined to 2% from 2.9% a year ago. 

In the EU, total car sales fell 0.2% year-on-year, declining for a third month even as registrations of battery electric (BEV), hybrid electric (HEV) and plug-in hybrid (PHEV) cars increased by 17.1%, 23.9% and 12.4% respectively.

Electrified vehicles - BEV, HEV or PHEV - sold in the bloc accounted for 59.2% of passenger car registrations in March, up from 49.1% in the previous year.

Among the largest EU markets, sales in Spain and Italy increased by 23.2% and 6.3% respectively, while in France and Germany they dropped by 14.5% and 3.9%. 

In Britain, registrations were up 12.4%.

CONTEXT

Market experts say a growing interest in electric cars in Europe, the world's second-biggest EV market, is largely due to new EU emission targets and the launch of cheaper electric models, although the EU has recently proposed loosening the targets. 

(Reporting by Greta Rosen Fondahn and Alessandro Parodi in Gdansk; Editing by Sandra Maler and Mark Potter)