Tesla has recorded a second consecutive annual decline in vehicle sales, confirming a tough year for the electric carmaker as Chinese rival BYD overtook it to become the world’s largest seller of battery-electric vehicles.
The US firm said it delivered 418,227 electric vehicles in the fourth quarter of 2025, a 15.6% drop compared with the same period a year earlier. The figure fell well short of market expectations and capped a year in which Tesla’s global deliveries slid to about 1.64 million vehicles.
Analysts had anticipated stronger fourth-quarter performance, with projections hovering around 441,000 units. Even Tesla’s own internal consensus forecast, released unusually ahead of the results, proved optimistic.
By contrast, BYD reported that sales of its battery-electric vehicles surged by nearly 28% in 2025 to 2.26 million units, pushing the Chinese automaker ahead of Tesla for the first time on an annual basis.
Tesla’s latest results underline the impact of changing market conditions, particularly in the United States. The removal of the US$7,500 federal tax credit for new electric vehicles in September triggered a short-term buying rush, followed by a sharp drop in demand once the incentive expired.
Sales across the wider EV market slowed after the credit ended, affecting rivals such as Ford, Hyundai and Kia. For Tesla, the slump dragged monthly sales to their lowest level since 2022, despite the introduction of cheaper versions of the Model 3 and Model Y.
The company has also struggled in key international markets. In China, Tesla faces intense competition from domestic manufacturers offering advanced electric vehicles at significantly lower prices.
In Europe, sales have weakened sharply. Registrations fell steeply in several major markets, amid political backlash linked to Elon Musk’s public positions and growing criticism that Tesla’s product lineup has gone stale. The company has not launched a new mainstream vehicle since the Cybertruck in 2023, and the polarising pickup has underperformed expectations.
Despite declining vehicle sales, Tesla’s share price climbed to record highs in December, driven by investor optimism around the company’s autonomous driving ambitions.
The firm has already launched a limited robotaxi service in Austin and plans to expand autonomous ride-hailing to more US cities. Musk has repeatedly said Tesla’s long-term future lies in self-driving technology and robotics rather than traditional car sales.
Production of the Cybercab robotaxi, designed without a steering wheel or pedals, is expected to begin in April. Musk has also claimed that fully unsupervised self-driving software will significantly boost demand, though safety monitors are still present in vehicles available to the public.
For now, Tesla remains caught between falling EV sales and bold bets on an autonomous future, even as global competition in the electric vehicle market intensifies.
Tesla rolls out aggressive incentives to avert second straight annual sales decline
