Tesla’s annual sales are down 9% due to being usurped by BYD as the global EV leader

Tesla’s annual sales fell for the second year in a row, a decline fueled by the elimination of the US tax credit and competition from Chinese automakers.

Tesla delivered 1.63 million vehicles worldwide in 2025, down 9% from 1.79 million in 2024, according to estimates. issued by the company. Specifically, about 50,850 vehicles are considered “other models,” a list that includes the Cybertruck as well as its predecessors, the Model X and Model S.

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

Tesla, once the world leader in EV sales, has seen its market share in Europe and China erode due to the rise of Chinese competitors. China’s BYD, which delivered 2.26 million EVs in 2025, it has now taken the top spot for EV sales in the world. Tesla is also facing more competition in the United States – though not least from Chinese automakers who are banned from selling cars in the country.

But it was the elimination of the $7,500 tax incentive in the US that appears to have caused 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 rushed to buy EVs before the EV tax credit expired. Since then, sales have declined despite efforts to entice buyers.

Tesla’s sales decline comes as CEO Elon Musk tries to steer the company away from the business of making and selling EVs and toward AI and robotics. Musk’s pitch is that there is money to be made in “sustainable quantities,” a term recently used in the company. Master Plan IV which covers the ecosystem of sustainable products, from transportation to energy production, battery storage and robotics.

And yet, most of Tesla’s revenue comes from its EV business. For example, Tesla made $28 billion in revenue in the third quarter, of which $21.2 billion came from selling EVs.