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Tesla lost its crown as the world’s best-selling electric vehicle maker on Friday due to customer revolt against Elon Musk’s right-wing politicsthe expiration of tax breaks for buyers in the United States and strong foreign competition caused sales to fall for the second year in a row.
Tesla said it delivered 1.64 million vehicles in 2025, down 9% from the previous year.
Chinese rival BYDwhich sold 2.26 million vehicles last year, is now the largest manufacturer of electric vehicles.
It’s a stunning reversal for an automaker whose growth once seemed unstoppable, overtaking traditional automakers with far more resources and helping to make Musk the world’s richest man. The decline in sales occurred despite President Donald Trump’s decision. marketing effort early last year, when he called a news conference to praise Musk as a “patriot” in front of Teslas lined up in the White House driveway, then announced he would buy one, going against presidential precedent of not endorsing products from private companies.
For the fourth quarter, Tesla sales totaled 418,227 units, even short of the much reduced target of 440,000 units expected by analysts recently surveyed by FactSet. Sales hit hard as $7,500 deal expires tax credit for the purchase of electric vehicles which has been gradually eliminated by the Trump administration at the end of September.
Tesla stock fell 2.6% to $438.07 on Friday.
Even with multiple problems rocking the company, investors are betting that Tesla CEO Musk can realize his ambitions of making Tesla a leader in the field. robo-taxi services and get consumers to adopt humanoid robots which can perform basic tasks in homes and offices. Reflecting this optimism, the stock ended 2025 with a gain of around 11%.
The latest quarter was the first with sales of slimmed-down versions of the Model Y and Model 3 that Musk unveiled in early October as part of an effort to revive sales. The new Model Y costs just under $40,000, while customers can purchase the cheaper Model 3 for under $37,000. These versions should help Tesla compete with Chinese models in Europe and Asia.
For fourth-quarter results released in late January, analysts expect the company to post a 3% decline in sales and a nearly 40% drop in earnings per share, according to FactSet. Analysts expect the downward trend in sales and profits to eventually reverse as 2026 progresses.
Musk said earlier last year that a “major twist” The sales were underway, but investors weren’t bothered when that didn’t go through, choosing instead to focus on Musk’s pivot into different lines of business. He said the company’s future lies in its driverless robotaxis service, its energy storage business and building robots for the home and factory – and much less on selling cars.
Tesla has started rolling out its robotaxi service in Austin in June, first with safety monitors in the cars to take over in case of problems, then testing without them. The company hopes to roll out the service in several cities this year.
To achieve this, it must take on rival Waymo, which has been operating autonomous taxis for years and has many more customers. It will also face regulatory challenges. The company is under several federal security investigations and other probes. In California, Tesla faces temporarily losing its license to sell cars in the state after a judge ruled it had misled customers on their safety.
“Regulation is going to be a major issue,” said Wedbush Securities analyst Dan Ives, a well-known bull on the stock. “We care about people’s lives.”
Ives nonetheless said he expects Tesla’s autonomous offerings to overcome any setbacks soon.
Musk said he hoped software updates to his cars would allow hundreds of thousands of Tesla vehicles to operate autonomously without human intervention by the end of this year. The company also plans to begin production of its AI-powered system. Cybercab without steering wheel or pedals in 2026.
To keep Musk focused on the company, Tesla directors granted Musk a potentially huge sum. a new salary package supported by shareholders at the annual meeting in November.
Musk scored another huge windfall two weeks ago when the Delaware Supreme Court overturned a ruling that stripped him of the $55 billion pay package Tesla doled out in 2018.
Musk could become the world’s first billionaire later this year when he sells shares in his rocket company. EspaceX to the public for the first time in what analysts expect to be a blockbuster IPO.
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AP video journalist Mustakim Hasnath contributed to this report from London.
