Tesla’s annual sales fall 9% as it is overtaken by BYD as global EV leader

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

Tesla delivered 1.63 million vehicles worldwide in 2025, down 9% from 1.79 million in 2024, data shows released by the company. Specifically, about 50,850 of those vehicles are considered “other models,” a collection that includes the Cybertruck as well as the older Model X and Model S.

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

Tesla, once the world leader in EV sales, has seen its market share in Europe and China eroded by the rise of Chinese rivals. China’s BYD, which delivered 2.26 million EVs in 2025, it now has the top spot in global EV sales. Tesla also faces more competition in the United States — though mostly not from Chinese automakers, which are barred from selling vehicles in the country.

But it was the elimination of the $7,500 federal tax credit that appears to have taken the biggest hit in the fourth quarter. Tesla sold a record 497,099 vehicles in the third quarter — up 29% from the previous quarter — as consumers scrambled 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 tries to shift the company away from the business of making and selling electric vehicles and toward artificial intelligence and robotics. Musk’s point is that there’s money to be made in “sustainable abundance,” a catchphrase used throughout the company’s recent Master Plan IV which describes an ecosystem of sustainable products, from transportation to power generation, battery storage and robotics.

And yet, most of Tesla’s revenue comes from its EV business. For example, Tesla generated $28 billion in revenue in the third quarter, of which $21.2 billion came from the sale of electric vehicles.