Tesla has delivered 1.64 million vehicles in 2025, a 9% decline from the previous year, allowing Chinese rival BYD to surpass it with 2.26 million sales and claim the title of world's largest electric vehicle maker. The drop stems from backlash over CEO Elon Musk's politics, the expiration of U.S. tax credits, and intensifying global competition. Despite the setback, investors remain optimistic about Tesla's pivot to robotaxis and humanoid robots.
Tesla reported delivering 1.64 million vehicles worldwide in 2025, marking a 9% decrease from 2024 and ending its reign as the top electric vehicle producer. Chinese competitor BYD achieved 2.26 million sales in the same period, driven by strong domestic demand in China and expanding exports that surged 151%. This shift highlights the maturing EV market, where affordability and supply chain control are gaining prominence over brand innovation alone.
The fourth quarter saw Tesla deliver 418,227 vehicles, falling short of analyst expectations of around 440,000. Key factors included the phase-out of the $7,500 U.S. federal tax credit for EV purchases at the end of September 2025, under the Trump administration. Additionally, customer backlash against Elon Musk's right-wing political stances contributed to protests, boycotts, and vandalism targeting Tesla. Overseas, competition from BYD's low-cost models, such as the Seagull priced under $10,000 in China, eroded Tesla's market share in Europe and Asia.
To counter the decline, Tesla introduced cheaper versions of the Model Y (under $40,000) and Model 3 (under $37,000) in early October 2025. However, these have not yet reversed the trend. Musk had predicted a 'major rebound' in sales earlier in the year, but the company instead emphasized diversification. Tesla launched its robotaxi service in Austin in June 2025, initially with safety monitors, and plans to expand to more cities. The company also aims for hundreds of thousands of autonomous vehicles by year's end and production of the steering-wheel-free Cybercab in 2026.
Regulatory hurdles loom large, with ongoing federal safety investigations and a California ruling that Tesla misled customers on safety, risking its sales license there. 'Regulatory is going to be a big issue,' said Wedbush Securities analyst Dan Ives. 'We’re dealing with people’s lives.' Despite Q4 challenges, Tesla's stock rose about 11% for 2025 overall, buoyed by optimism in autonomy and robotics, though it fell 2.6% to $438.07 on the announcement day.
BYD's rise builds on its battery expertise, including the efficient Blade Battery, and vertical integration, allowing cost reductions of up to 30%. Unlike Tesla's pure EV focus, BYD includes plug-in hybrids in its broader 4.6 million vehicle sales. This milestone follows BYD narrowly trailing Tesla in 2024 (1.76 million vs. 1.79 million), underscoring rapid competitive evolution.
