Well, your first step is to avoid forcing him to battle. Sometimes, pokémon simply don’t want to, and that’s perfectly fine. If you’d still like to leave it open as an option, you may, but always allow your pokémon to choose to battle, especially if they seem nervous.
In the meantime, work on his self-confidence by focusing on talents that don’t necessarily have to do with battling. It’s possible that he is self-conscious about his new form, as you say, and if so, then it’s up to you to teach him that being a gallade is a good thing (and that he hasn’t made a mistake in choosing to be one). Think about his interests and draw out one that might highlight the benefits of his new form. For example, if he enjoyed gardening, show him how to trim plants and pick fruits with his blades. If he liked to paint, show him that his improved strength as a fighting-type can help him carry an entire easel to wherever he would like to set up. Linking positive experiences (from encouraging him to pursue his interests) with his form as a gallade can, at the very least, help him see his evolution as a good thing; at the very most, should his self-image not be the problem, it should help lift his spirits enough that he may be able to communicate to you what his reservations actually are so you can work with those.
Above all, be patient. There is always an adjustment period after evolution, and this period lasts longer for some pokémon than others.
Best of luck!