Tesla loses title as world’s largest electric vehicle maker as sales fall again
Elon Musk's EV giant officially slipped into second place in the global electric vehicle race after posting a second consecutive annual decline in sales, according to figures released on Friday
The Texas-based carmaker reported it delivered 1.64 million vehicles throughout 2025, falling short of the 1.79 million units sold in 2024.
The 8.6% drop confirms that China’s BYD has overtaken Tesla as the world’s top seller of battery-electric vehicles, with the Chinese rival logging record sales of 2.26 million units last year.
Wall Street appeared fairly sanguine on the update, with Tesla shares remaining relatively flat in early trading on Friday.
For the fourth quarter of 2025, Tesla delivered 418,227 vehicles, missing the 426,000 units expected by analysts. Production for the quarter stood at 434,358 vehicles.
The company’s performance was hampered by the early expiration of US federal electric vehicle incentives in September.
Tesla also faced a challenging year in Europe, where registration data showed a 39% decline in the first 11 months of 2025.
This downturn has been partly attributed to a consumer backlash against Mr Musk’s increasingly provocative political rhetoric and his support for extremist political figures in Europe and the UK.
In contrast to the vehicle division, Tesla’s energy business saw record growth. The company deployed 14.2 gigawatt hours (GWh) of battery storage in the final quarter, up from 12.5 GWh in the previous period. These systems are used for home backup power and large-scale data centres.
Despite the sales slump, Tesla’s valuation remains buoyed by Mr Musk’s long-term vision of "sustainable abundance."
Shareholders recently approved a new $1 trillion pay plan for the CEO, reflecting confidence in his promises of future robotaxis and humanoid robots capable of performing domestic and industrial tasks.
Tesla is expected to provide a further update on its business performance when it reports its full fourth-quarter financial results on January 28.
The company's primary volume drivers remain the Model 3 and Model Y, though analysts suggest the introduction of a more affordable Model Y variant in October may help the firm regain market share in 2026.
Would you like me to look into the specific market share gains BYD made in the UK market compared to Tesla over the last twelve months?
This video provides an in-depth analysis of how BYD managed to overtake Tesla in total sales during the 2025 fiscal year.
The Recap
- Tesla produced over 434,000 vehicles in the fourth quarter.
- Tesla delivered over 418,000 vehicles in the quarter.
- Management will hold Q4 webcast on 28 January.
