Tesla annual sales decline 9% as it’s overtaken by BYD as global EV leader

Tesla has experienced a significant decline in annual vehicle sales for the second consecutive year, driven by the elimination of the federal tax credit in the United States and heightened competition from Chinese manufacturers. According to the latest data released by the company, Tesla delivered 1.63 million vehicles worldwide in 2025, marking a 9% decrease from 1.79 million in 2024. Among these deliveries, approximately 50,850 units fall under the category of "other models," which includes the much-anticipated Cybertruck alongside the older Model X and Model S. In the fourth quarter alone, Tesla reported sales of 418,227 vehicles, reflecting a 15.6% drop compared to the same quarter the previous year, and significantly missing analysts' expectations. Following these revelations, Tesla's stock price dropped by over 2% as the market opened after the New Year holiday. Once the leader in global electric vehicle sales, Tesla has seen its market share in both Europe and China diminish due to the rapid rise of competitors like BYD. The Chinese automaker delivered an impressive 2.26 million EVs in 2025, surpassing Tesla to claim the title of the world's largest EV seller. In the United States, Tesla is also facing increasing competition, although not from Chinese brands, which are currently prohibited from selling their vehicles in the country. The most significant blow to Tesla's sales seems to stem from the removal of the $7,500 federal EV tax incentive, particularly impacting fourth-quarter performance. Prior to the credit's expiration, Tesla had a record-breaking third quarter, selling 497,099 vehicles, a staggering 29% increase from the previous quarter as consumers rushed to take advantage of the incentive. Despite efforts to bolster sales, the decline continues, coinciding with CEO Elon Musk's strategic shift of the company’s focus from solely manufacturing electric vehicles to exploring opportunities in AI and robotics. Musk envisions a future of "sustainable abundance," a concept highlighted in the company’s recent Master Plan IV, which outlines an ecosystem encompassing sustainable transportation, energy generation, battery storage, and robotics. Nevertheless, the bulk of Tesla's revenue still heavily relies on its electric vehicle sales, with $21.2 billion of the $28 billion generated in the third quarter coming directly from EV sales.