Tesla has lost its position as the world’s leading electric vehicle (EV) maker to China’s BYD after experiencing a second year of declining sales due to increasing competition, the end of U. S. tax credits, and negative brand sentiment. In 2025, while global EV sales grew by 28%, BYD outsold Tesla for the first time annually, particularly growing its market share in Europe. Tesla’s sales dropped about 8.6% in 2025, creating concerns about its ability to maintain its core automotive business as CEO Elon Musk focuses on future projects like robotaxis and humanoid robots. Consequently, Tesla’s shares fell by about 2%.
Tesla’s recent quarterly figures were affected by a rush to secure tax credits before the U. S. government ended the incentive. In the last quarter of the year, Tesla delivered 418,227 vehicles, down 15.6% compared to the same quarter the previous year, and fell short of analyst expectations. For the full year, Tesla delivered 1.64 million vehicles, slightly below the expected 1.65 million. Analysts suggest that weaker demand was anticipated due to the end of EV tax credits.
Both Chinese and European manufacturers like BYD, Volkswagen, and BMW are intensifying competition against Tesla. In October, Tesla launched lower-priced versions of its Model Y and Model 3 to attract cost-conscious customers in Europe, despite disappointing some investors hoping for larger price reductions. Despite this decline in vehicle deliveries, Tesla’s shares gained around 11.4% in 2025, increasing Musk’s wealth.
With information from Reuters
