Jan 6 (Reuters) - Tesla's UK car registrations dropped by more than 29% year-on-year in December, industry data showed on Tuesday, underscoring the intense competition from Chinese rivals faced by the U.S. electric vehicle maker in its largest European market.

The Elon Musk-led company's UK registrations - a proxy for sales - fell to 6,323 units last month, according to New AutoMotive data. For 2025, Tesla's UK sales fell 8.9% year-on-year.

The drop echoed trends seen in other European markets, where Tesla sales have suffered due to competition, an ageing lineup and Musk's political stance in Europe. 

In contrast, UK car registrations for Chinese rival BYD jumped nearly five-fold to 5,194 units in December. 

Still, Tesla retained its position as the best-selling electric car brand in Britain even as BYD races to close the gap, New AutoMotive data showed.

Tesla ceded its crown as the world's top EV maker to BYD after the U.S. firm reported last week annual sales that fell for a second year.

Separately, Tesla registrations in the Netherlands fell 27% to 4,300 vehicles in December, data from car industry RAI Vereniging showed on Monday.

Overall, Britain's car registrations grew in 2025, according to separate data from New AutoMotive and Society of Motor Manufacturers and Traders (SMMT) on Tuesday.

New car registrations in Britain rose 3.5% in 2025 to 2 million, the first time they reached that level since the pandemic, SMMT's data showed.

"Rising EV uptake is an undoubted positive, but the pace is still too slow and the cost to industry too high," Mike Hawes, SMMT Chief Executive said.

Two Chinese brands ranked among Britain's top 10 best-selling car brands in December, with SAIC's MG at No.2 and BYD at No.6, according to SMMT.

"While the transition to EVs isn't quite happening at the pace some predicted... the influx of new models and brands from China is creating fierce competition that will continue to force prices down," said Steve Walker, head of digital content at industry website Auto Express.

(Reporting by Yadarisa Shabong and Rishab Shaju in Bengaluru; additional reporting by Alessandro Parodi and Nick Carey; Editing by Leroy Leo and Mrigank Dhaniwala)