BYD Overtakes Tesla as World’s Top EV Maker amid Sliding U.S. Sales
Tesla has lost its position as the world’s leading electric vehicle manufacturer to China’s BYD, after its annual sales fell for a second consecutive year. The U.S. carmaker’s decline was attributed to rising competition, the expiration of U.S. tax incentives and growing brand backlash.
Tesla Faces Mounting Pressure amid Shifting Market Dynamics
Global electric vehicle sales climbed 28% in 2025, with BYD surpassing Tesla in annual deliveries for the first time. The Chinese automaker’s rapid expansion in Europe, where it has been steadily gaining ground, played a key role in its victory.
Tesla’s sales dropped by about 8.6% last year, raising questions about its ability to rejuvenate its core automotive business as CEO Elon Musk pivots the company toward robotaxis and humanoid robots. Tesla shares slipped around 2% in afternoon trading following the announcement.
“Investors are so focused on Tesla’s future that they are ignoring delivery numbers,” said Dennis Dick, a trader at Triple D Trading. “It’s all about Optimus, Robotaxi and physical AI.”
End of U.S. Tax Credits Adds to Tesla’s Struggles
The expiry of U.S. federal tax credits further weakened Tesla’s domestic sales. The company had benefited from a surge in third-quarter deliveries as buyers rushed to secure the $7,500 federal incentive before the Trump administration terminated the programme in September.
During the fourth quarter, Tesla delivered 418,227 vehicles, down 15.6% from 495,570 a year earlier, missing analysts’ forecasts of 434,487 units. For the full year, deliveries totalled 1.64 million, compared with 1.79 million in 2024.
U.S. electric vehicles accounted for 6.2% of retail sales in the fourth quarter, down 3.6 percentage points year-on-year, while the average transaction price rose nearly $6,000 to $53,300, according to J.D. Power.
Despite the sales decline, Tesla set a record in its energy storage business, deploying 14.2 GWh of energy products. The company is expected to release its fourth-quarter results on 28 January.
BYD Expands Globally as Competition Intensifies
Tesla’s weakening performance has been compounded by aggressive competition from BYD, Volkswagen and BMW. In 2025, BYD’s overseas sales surged to one million vehicles, a 150% increase from the previous year. The Chinese automaker plans to expand further, targeting up to 1.6 million overseas sales in 2026.
Across Europe, Tesla registrations fell in most markets but rose sharply in Norway, where it maintained strong demand despite a shrinking share elsewhere. In response to declining deliveries, Tesla introduced lower-cost “Standard” versions of its Model Y and Model 3 in October, priced about $5,000 below earlier base models.
The move aimed to attract budget-conscious customers but disappointed investors who had expected more substantial price cuts or an entirely new mass-market vehicle.
Even with falling deliveries, Tesla’s stock rose by 11.4% in 2025, bolstering Elon Musk’s personal wealth, though concerns over the company’s future competitiveness continue to mount.
with inputs from Reuters
