Tesla lost its crown as the world’s bestselling electric vehicle maker on Friday as a customer revolt over Elon Musk’s right-wing politics, expiring U.S. tax breaks for buyers, and stiff overseas competition pushed sales down for a second year in a row.
Tesla said that it delivered 1.64 million vehicles in 2025, down 9% from a year earlier.
Chinese rival BYD, which sold 2.26 million vehicles last year, is now the biggest EV maker.
It’s a stunning reversal for Musk, who once dismissed BYD as a threat as Tesla’s rise seemed unstoppable, crushing traditional automakers with far more resources and helping make him the world’s richest man.
For the fourth quarter, sales totaled 418,227, falling short of the 440,000 that analysts polled by FactSet expected. The sales total was impacted by the expiration of a $7,500 tax credit that was phased out by the Trump administration at the end of September.
Tesla stock was up 0.5% at $451.60 in early trading Friday.
Even with multiple issues buffeting the company, investors are betting that Tesla CEO Musk can deliver on his ambitions to make Tesla a leader in robotaxi service and get consumers to embrace humanoid robots that can perform basic tasks in homes and offices. Reflecting that optimism, the stock finished 2025 with a gain of approximately 11%.
The latest quarter was the first with sales of stripped-down versions of the Model Y and Model 3 that Musk unveiled in early October as part of an effort to revive sales. The new Model Y costs just under $40,000 while customers can buy the cheaper Model 3 for under $37,000. Those versions are expected to help Tesla compete with Chinese models in Europe and Asia.
For fourth-quarter earnings coming out in late January, analysts are expecting the company to post a 3% drop in sales and a nearly 40% drop in earnings per share, according to FactSet. Analysts expect the downward trend in sales and profits to eventually reverse itself as 2026 rolls along.
Investors have largely shrugged off the falling numbers, choosing to focus on Musk’s pivot to different parts of business.
He has been saying that plunging car sales don’t matter as much now because the future of the company lies more with his new driverless robotaxis service, the company’s energy storage business and building robots for the home and factory. To make his task worthwhile, Tesla’s directors awarded Musk a potentially enormous new pay package that shareholders backed at the annual meeting in November.
Musk scored another huge windfall two weeks ago when the Delaware Supreme Court reversed a decision that deprived him of a $55 billion pay package that Tesla doled out in 2018.
Musk could become the world’s first trillionaire later this year when he sells shares of his rocket company SpaceX to public for the first time in what analysts expect would be a blockbuster initial public offering.
This story has been corrected to show that BYD sold 2.26 million vehicles last year, not 2.26.
—Associated Press