Tesla’s annual sales decline 9% as it is overtaken by BYD as global electric vehicle leader

Tesla’s annual sales fell for the second year in a row, a decline fueled by the elimination of the federal tax credit in the United States and competition from Chinese automakers.

Tesla delivered 1.63 million vehicles globally in 2025, down 9% from 1.79 million in 2024, the figures show. published by the company. Notably, approximately 50,850 of these vehicles are considered “other models,” a collection that includes the Cybertruck as well as its older Model X and Model S.

Tesla reported fourth-quarter sales of 418,227, down 15.6% from the same period last year and far more than analysts expected. Tesla stock fell more than 2% as the market opened after the New Year’s holiday.

Tesla, once the world leader in electric vehicle sales, has seen its market share in Europe and China eroded by the rise of its Chinese competitors. The Chinese BYD, which delivered 2.26 million electric vehicles in 2025, it now occupies first place in the world in sales of electric vehicles. Tesla also faces increased competition in the United States, but particularly from Chinese automakers, who are barred from selling vehicles in the country.

But it was the elimination of the $7,500 U.S. federal tax incentive that appeared to have dealt the biggest blow in the fourth quarter. Tesla sold a record 497,099 vehicles in the third quarter – a 29% increase from the previous quarter – as consumers rushed to buy electric vehicles before the federal electric vehicle tax credit disappeared. Since then, sales have declined despite efforts to attract buyers.

Tesla’s sales decline comes as CEO Elon Musk attempts to shift the company from making and selling electric vehicles to AI and robotics. Musk’s argument is that there is money to be made in “sustainable abundance,” a slogan used throughout the company’s recent pitch. Master Plan IV which describes an ecosystem of sustainable products, from transportation to energy production, battery storage and robotics.

And yet, the majority of Tesla’s revenue comes from its electric vehicle business. For example, Tesla generated $28 billion in revenue in the third quarter, of which $21.2 billion came from electric vehicle sales.