Chinese automaker BYD has surpassed Tesla to become the world's largest seller of electric vehicles in 2025, with sales of 2.26 million units compared to Tesla's 1.64 million deliveries. Tesla's figures mark a second consecutive annual decline of 9 percent, driven by the end of U.S. tax credits and intensifying global competition. Despite the sales drop, Tesla's stock rose about 11 percent for the year amid optimism over future technologies like robotaxis.
Tesla announced on January 2, 2026, that it delivered 1.64 million vehicles globally in 2025, a 9 percent decrease from 1.79 million in 2024. This marks the company's second straight year of declining sales, with fourth-quarter deliveries falling 15.6 percent to 418,227 units, missing analyst expectations of around 440,000 compiled by FactSet.
In contrast, BYD reported selling 2.26 million battery-electric vehicles in 2025, a nearly 28 percent increase from the previous year. The Shenzhen-based firm, founded in 1995 as a battery company, achieved this milestone despite not selling vehicles directly in the U.S. market, where tariffs limit access. BYD's growth was fueled by expansion in Europe, Latin America, and Southeast Asia, with overseas sales exceeding 1 million units for the first time, up 150 percent.
Tesla's challenges stem from multiple factors. The expiration of the $7,500 federal tax credit for EV purchases at the end of September 2025, phased out under the Trump administration, significantly impacted demand. A customer backlash over CEO Elon Musk's political activities, including his role in the Department of Government Efficiency (DOGE) until May 2025 and support for controversial figures, led to protests and sales slumps in Europe and the U.S. Intensifying competition from Chinese rivals like BYD, which offers lower-priced models, further eroded Tesla's position.
To counter this, Tesla introduced cheaper versions of the Model 3 (under $37,000) and Model Y (under $40,000) in early October 2025, aimed at competing in Europe and Asia. Deliveries of these models accounted for 406,585 units in Q4, while 'other' models like the Cybertruck, Model S, and Model X totaled just 11,642, down over 50 percent year-over-year.
Despite the downturn, investors remain focused on Tesla's pivot to autonomy and robotics. Musk has emphasized robotaxi services, rolled out in Austin in June 2025 with safety monitors, and plans for unsupervised Full Self-Driving updates. Analyst Dan Ives of Wedbush Securities noted, “Regulatory is going to be a big issue... We’re dealing with people’s lives,” but expects Tesla to lead in self-driving tech. Tesla's board approved a potential $1 trillion pay package for Musk in November 2025, tied to performance targets including humanoid robot sales.
BYD's founder Wang Chuanfu attributed domestic slowdowns to competition but highlighted upcoming technologies. Globally, EV sales grew, but Tesla's share slipped as the market crowded with affordable options from Geely, MG, and others.