Tesla Loses Title as World’s Biggest Electric Vehicle Maker as Sales Fall for Second Year
Tesla lost its crown as the world’s bestselling electric vehicle maker on Friday as a customer backlash over CEO Elon Musk’s right-wing politics, the expiration of U.S. tax incentives and growing overseas competition pushed sales down for a second year in a row.
Tesla said it delivered 1.64 million vehicles worldwide in 2025, a 9% decline from the previous year. Chinese automaker BYD surpassed Tesla to become the world’s largest electric vehicle maker after selling 2.26 million vehicles last year.
The shift marks a stunning reversal for Musk, who once dismissed BYD as a serious threat as Tesla’s growth appeared unstoppable, helping disrupt traditional automakers and cement Musk’s status as the world’s richest man.
For the fourth quarter, Tesla delivered 418,227 vehicles, falling short of the 440,000 analysts surveyed by FactSet had expected. Sales were hurt in part by the expiration of a $7,500 federal tax credit that was phased out by the Trump administration at the end of September.
Tesla shares rose 0.5% to $451.60 in early trading Friday.
Despite declining vehicle sales, investors have largely focused on Musk’s broader vision for the company, including ambitions to build a robotaxi network, expand Tesla’s energy storage business, and develop humanoid robots capable of performing basic tasks in homes and factories. Reflecting that optimism, Tesla stock ended 2025 up about 11%.
The fourth quarter also marked the first period with sales of stripped-down versions of the Model Y and Model 3, which Musk unveiled in early October in an effort to revive demand. The lower-priced Model Y costs just under $40,000, while the Model 3 starts at under $37,000, a move analysts say could help Tesla compete with lower-cost Chinese models in Europe and Asia.
Looking ahead, analysts expect continued pressure on Tesla’s financial results. FactSet forecasts call for a 3% drop in sales and nearly a 40% decline in earnings per share when the company reports fourth-quarter results later this month, though many expect the downturn to ease as 2026 progresses.
Musk has repeatedly downplayed falling vehicle sales, arguing that Tesla’s long-term value lies less in car deliveries and more in emerging businesses such as autonomous driving, energy systems and robotics. Tesla’s board reinforced that strategy by awarding Musk a potentially massive new compensation package, approved by shareholders at the company’s annual meeting in November.
Two weeks ago, the Delaware Supreme Court reversed a lower court decision that had stripped Musk of a $55 billion pay package originally awarded in 2018.
Musk could also see another major financial windfall later this year if he follows through with plans to take his private rocket company, SpaceX, public for the first time, a move analysts expect would generate intense investor interest.
