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Tesla lost the crown as the world’s biggest electric-car maker to China’s BYD in 2025 after vehicle sales declined for the second consecutive year.
Elon Musk’s group delivered 1.64 million fully electric vehicles last year, down 9 percent from the 1.79 million it will ship in 2024, it said on Friday, in the wake of tougher competition and the repeal of US tax credits for EV purchases.
BYD said this week it sold 2.26 million pure EVs in 2025, up 28 percent from a year earlier, after expanding into Europe and other overseas markets.
The Chinese group previously overtook Tesla on a quarterly basis, but has now overtaken its US rival in terms of annual deliveries of fully electric models.
“BYD has solidified its place on the world stage,” said Tu Le, founder of consultancy Sino Auto Insights. He said Chinese innovation is making it harder for Tesla and others to compete in the mass market for EVs.
“BYD, along with the rest of Chinese EV Inc., has raised the stakes so high that it has become very difficult to design a vehicle that will be able to take significant share from them,” he said.
While Tesla increased its sales every year between 2011 and 2023, Friday’s figures represent its second consecutive annual decline.
The company is under immense pressure following the expiration of US tax credits, consumer reaction to Musk’s political activities and a public spat between the world’s richest man and US President Donald Trump.
Tesla said on Friday it delivered 418,227 vehicles in the final quarter of 2025, down 16 percent from the same period a year earlier and below market expectations of 423,000 vehicles.
While the group’s traditional automotive business has declined, Musk has made a strategic pivot toward autonomous driving, artificial intelligence and robotics.
“It seems like Tesla doesn’t even want to compete (on pure EVs),” Le said. “If they did, they would be on the verge of launching new models.”
The company took the unusual step this week of releasing analysts’ forecasts for annual deliveries ahead of the official announcement, in what appeared to be an effort to manage market expectations.
It has tried to rejuvenate sales with a refreshed version of its Model Y as well as a cheaper, stripped-down version. But the recovery has not been as strong as the company had hoped in the face of an influx of more affordable EVs from Chinese and Western rivals.
“Europe continues to be a headwind for Tesla, with the company still having difficulty gaining regulatory approval for its full self-driving (FSD) technology,” Wedbush analyst Dan Ives said in a note.
He predicted the technology would receive European regulatory approval in the first half of 2026.
While Tesla has struggled to recover its sales in Europe, BYD has rapidly increased its market share across the continent with new, more affordable EVs.
The Chinese group will also begin local production at a new plant in Hungary as it deals with domestic pressure due to Beijing’s crackdown on aggressive price competition.
Tesla’s global deliveries hit record levels in the third quarter as U.S. consumers rushed to buy electric cars ahead of the expiration of EV tax credits at the end of September.
But automotive executives predict a steep decline in EV sales in the US as carmakers expand their line-ups of hybrid and other petrol models due to Trump’s policy change.
Analysts expect Tesla to deliver 1.75 million vehicles this year – down from 2024 levels, according to forecasts published by the carmaker.
The group’s shares reached an all-time high of $489.88 in mid-December as investors looked ahead to its self-driving robotaxi business.
Shares closed at less than $450 at the end of 2025 and were down 2.95 per cent at $438.07 in New York on Friday, giving Tesla a market capitalization of about $1.37tn.
