Tesla Inc. continues to post steep sales declines in Europe, 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.

In July, despite a rise in overall electric-vehicle purchases, Tesla’s deliveries in Germany suffered a sharp drop, according to figures released Tuesday by the nation’s vehicle licensing authority. The Kraftfahrt-Bundesamt (KBA) showed Tesla posted only 1,