Tesla has lost its position as the world’s leading electric vehicle seller after posting a second consecutive annual drop in deliveries. China’s BYD has now taken the top spot amid fierce competition and the end of key U.S. incentives.
The company delivered 1.63 million vehicles worldwide in 2025, a 9% reduction from 1.79 million the previous year according to its production and delivery report. This included about 50,850 “other models” such as the Cybertruck, Model S and Model X.
Fourth-quarter figures revealed 418,227 deliveries, down 15.6% from the prior year and well below expectations. Tesla shares fell more than 2% in early post-New Year trading.
The firm, long the EV sales pacesetter, has seen its share shrink in Europe where deliveries dropped 18% per ACEA data and in China due to aggressive local rivals. BYD delivered 2.26 million pure EVs in 2025 to grab the global lead, as reported by Reuters.
In the U.S., protected from Chinese entrants by tariffs, Tesla still grapples with Ford, Rivian and slowing overall EV adoption at 7.5% market penetration according to Electrek in December 2025.
The U.S. $7,500 federal rebate’s expiry hit hardest in the final quarter. Tesla hit a record-breaking 497,099 deliveries in the third quarter, up 29% from before, as buyers scrambled to beat the deadline. Sales cooled sharply afterwards despite discounts and financing offers.
Chief executive Elon Musk is now redirecting Tesla from vehicle sales towards AI, robotics and broader sustainability. He promotes “sustainable abundance” as outlined in the firm’s Master Plan IV, covering energy storage, solar power and humanoid robots.
EVs remain the revenue backbone however. Third-quarter income totalled $28 billion with $21.2 billion from car sales. BloombergNEF forecasts suggest BYD may extend its advantage in 2026 while Tesla hopes a Robotaxi launch and Cybercab scaling will spark recovery.