Tesla has lost its position as the world’s top electric vehicle seller to China’s BYD, capping a year marked by falling sales, political backlash against CEO Elon Musk, and the end of US tax incentives for EV buyers.
The company said on Friday it sold 1.64 million vehicles in 2025, down 9 percent from the previous year. Rival BYD sold 2.26 million vehicles over the same period, overtaking Tesla for the first time.
Founded in 2003, Tesla once far outpaced traditional automakers as it built the modern EV market. That advantage has narrowed as competition intensified, particularly from Chinese manufacturers whose domestic market has surged ahead on price, scale, and state support.
Tesla’s slide has also played out against a politically turbulent backdrop. Musk’s public alignment with US President Donald Trump during the 2024 campaign, followed by his leadership of a controversial “government efficiency” panel known as DOGE, proved polarising. The initiative was linked to mass layoffs of federal workers and triggered protests outside Tesla facilities, along with slumps in sales in several markets.
Tesla’s fourth-quarter deliveries totalled 418,227 vehicles, missing even the reduced analyst expectation of 440,000, according to data from FactSet.
Musk stepped away from DOGE in May, a move widely seen as an attempt to calm investors and refocus attention on Tesla’s core business.
The company was also hit by the expiration of a $7,500 US tax credit for EV purchases, phased out by the Trump administration at the end of September. Trump’s broader hostility toward electric vehicles has further strained his relationship with Musk, despite their earlier political alignment.
Still, investor confidence in Tesla has not collapsed. Shares ended 2025 up about 11 percent, reflecting continued belief in Musk’s long-term bets on driverless robotaxis and humanoid robots for domestic use.
Tesla has also rolled out cheaper versions of the Model Y and Model 3, aiming to compete with lower-priced Chinese EVs in Europe and Asia, where price sensitivity has become a decisive factor.
Musk entered 2026 as the world’s richest person. It is widely believed that the anticipated public offering of his rocket company, SpaceX, later this year could make the 54-year-old the world’s first trillionaire.
In November, Tesla’s board approved a potentially historic pay package for Musk worth nearly $1 trillion if aggressive performance targets are met. In December, Musk scored another legal victory when the Delaware Supreme Court reinstated a $55bn compensation deal that had been frozen since 2018.
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