Tesla’s annual sales fell 9% as BYD overtook it as the global leader in electric vehicles

Tesla’s annual sales fell for the second year in a row, a decline fueled by the removal of a federal tax break 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, according to figures. Issued by the company. It’s worth noting that about 50,850 of these vehicles are considered “other models,” a group that includes the Cybertruck as well as the older Model

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

Tesla, once the global leader in electric vehicle sales, has seen its market share in Europe and China eroded by the rise of Chinese competitors. Chinese BYD, which 2.26 million electric cars delivered In 2025, it now holds the number one spot in global electric vehicle sales. Tesla also faces more competition in the United States, although it is not one of the Chinese automakers that is banned from selling cars in the country.

But it was the elimination of the $7,500 US federal tax incentive that appeared to deal the biggest blow in the fourth quarter. Tesla sold a Record breaking 497,099 vehicles in the third quarter — a 29% increase from the previous quarter — as consumers raced to buy EVs before the federal EV 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 cars and toward artificial intelligence and robotics. Musk believes there is money to be made through “sustainable abundance,” a slogan that has been used throughout the company’s recent tenure. Fourth master plan Describes the ecosystem of sustainable products, from transportation to power generation, battery storage and robotics.

However, the bulk of Tesla’s income 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 selling electric vehicles.