The seven-time green points classification winner did succeed in taking back the green jersey from Sam Bennett (Deceuninck-Quickstep), but left points and a potential stage win out on the road.
The finish into Lavaur saw Sagan drop his chain in the finale, unable to recover from that point, finishing only 13th.
"We did a similar stage in 2013, which I won," said Sagan. "We pulled the race all day, to get rid of sprinters, and that day I went and won. This time, it was similar but without the win.
"I was unlucky in the sprint because my chain got blocked. It was a mechanical problem, yes, but that wasn’t the whole story. I was behind Van Aert, but then I got out of position, and everybody went left, I tried not to fall but I collided with someone, I don’t know who, and my chain came off. I’m lucky to not have crashed. After that, it was impossible to get to the front."
The stage was blown apart by BORA-hansgrohe on the climb of the Côte de Luzençon, splintering the peloton, with Sagan's main green jersey rival, Bennett, caught out behind the peloton. Bennett's group threatened to rejoin, at one nearly within touching distance of the rear of the main bunch but BORA-hangrohe surged again and re-established their advantage.
"I’m very happy with my teammates because they did a really extraordinary job," said Sagan. "We decided together to do it. The director at first didn’t really agree but the race went very well, and even the directors were happy in the end."
"I'm disappointed because we controlled the race all day. Everything seemed like it was very good and in the end I had bad luck in the final - I had the chain drop off and I missed a lot of points. That's f****** cycling."
Sagan now sits in the green jersey after taking 20 points out on the road to Bennett's zero, but could have had more if he had not been beaten by Matteo Trentin (CCC) at the intermediate sprint, and if he had the opportunity to make more of the sprint finish. The seven-time green jersey winner has 138 points to Bennett's 129, with Wout van Aert third on 104 points.
The Tour de France continues with Stage 8 as the race ventures into the Pyrenees, cresting the hard climbs of the Port de Bales and the Col de Peyresourde. Watch LIVE on SBS and SBS On Demand from 9:30pm AEST.