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Tesla has officially ceded its long-held crown as the world’s leading electric vehicle maker, with Chinese automaker BYD now firmly in the lead after a year of strong sales growth in Asia and stagnant demand for Elon Musk’s cars. The changing of the guard comes as Tesla announces its second consecutive annual drop in deliveries, underscoring how quickly the balance of power in the global race for electric vehicles has tilted in China’s favor. It also comes after Musk’s on-and-off ally President Donald Trump ended federal subsidies for electric vehicle purchases in the United States, a move that Ford CEO Jim Farley predicted in September. would cut the electric vehicle market in half.
China’s BYD said this week it sold about 2.26 million fully electric vehicles in 2025, an increase of almost 28% from the previous year and enough to make it the largest seller of electric vehicles in the world. The Shenzhen-based company’s electric tally does not include its extensive range of plug-in hybrids, which brings total sales of “new energy vehicles” to around 4.6 million last year.
On the other hand, Tesla announced that its 2025 deliveries fell to around 1.6 million vehicles.down about 8-9% from 2024 and well below BYD’s all-electric total. This marks the second year in a row of Tesla’s sales decline, which peaked at around 1.8 million deliveries in 2023, but was still narrowly ahead of BYD in 2024.
In an unusual move, Tesla issued a preemptive statement on Tuesday, detailing 20 Wall Street analysts’ estimates of its deliveries through 2029, while adding that it “does not endorse” any of the information. The informationTesla’s Martin Peers suggested that Tesla didn’t want anyone “to be shocked by the magnitude of the sales decline it’s about to announce for the fourth quarter of 2025.” Peers noted that analysts were expecting a 14.6% decline to 422,850 and, in fact, Tesla reported a 15% decline to 418,227. Analyst Gary Black was on target in an article oninterpreting Tesla’s statement as a sign that it would release a number closer to the 420,000 range than previous estimates of around 450,000. Tesla stock is down more than 6% over the past five days, but remained relatively unchanged on Friday, indicating that the market had already priced in this news.
Ford engine The company, for its part, announced a $19.5 billion writedown on its electric vehicle initiatives in December, with Farley saying there was a “customer-focused shift.” Talk to CNBC On the electric pivot, Farley said that, consistent with his predictions, the electric vehicle market has already fallen to about 5% of the U.S. auto market, cut in half since subsidies ended in September.
Tesla’s rare growth reversal
For more than a decade, Tesla has been synonymous with relentless growth, taking advantage of first-mover advantage and generous subsidies to become the face of the electric vehicle revolution. This trajectory reversed in 2024 and 2025, as global demand slows, competitors’ prices drop, and key incentives in the United States and Europe expire. Elon Musk’s political evolution likely also played a role, with his shift to the right clashing with the demographics of many Tesla owners, who tend to be wealthy and left-leaning. Sales in Europe has declined significantly while Musk has taken steps to endorse, for example, the far-right AFD in Germany And Marine Le Pen in France.
BYD’s rise has been built on aggressive pricing, dense local supply chains and a wide range of mass-market models targeting price-sensitive domestic and foreign buyers. The company now sells everything from economy city cars to premium sedans, and has rapidly expanded its exports to Europe, Southeast Asia, Latin America and the Middle East. BYD sales are actually not allowed in the United States at all, with 100% high tariffs on Chinese electric vehicles since 2024, signed into law under President Joe Biden.
Crucially, BYD caught up and then overtook Tesla in pure electric vehicle production in 2024, before converting this lead into a clear commercial advantage last year, when its volumes exceeded 2.2 million fully electric units. Analysts say the company’s size in China – by far the world’s largest electric vehicle market – gives it cost and learning curve advantages that are increasingly difficult for Western rivals to match.
The ranking change comes at a politically sensitive time, when Washington and Brussels are already scrutinizing Chinese imports of electric vehicles and raising tariffs over concerns about overcapacity and state support. Any additional crackdowns could make it harder for BYD to expand overseas, even as it deepens its dominance in China, where competition remains fierce and local subsidies are curtailed.
