Tesla annual sales decline 9% as it’s overtaken by BYD as global EV leader

Los Angeles: Tesla has had a tough year. Its annual sales have dropped 9 percent, marking the second year in a row of falling numbers. This decrease is linked to the removal of the federal tax credit in the U.S. and growing competition from Chinese car makers.

In 2025, Tesla delivered 1.63 million cars worldwide. This is down from 1.79 million in 2024. Among those sold, about 50,850 were other models, which include the Cybertruck and the older Model S and Model X. In the fourth quarter alone, Tesla sold 418,227 cars, which is a 15.6 percent fall from last year. As a result, Tesla’s stock dropped more than 2 percent after the New Year holiday.

The company that used to lead global EV sales has seen its market share shrink. BYD, a Chinese automaker, delivered 2.26 million EVs in 2025, overtaking Tesla for the top spot. Although Tesla faces competition in the U.S., it does not come from Chinese companies, since they can’t sell cars here.

The loss of the $7,500 federal tax incentive seemed to hurt Tesla the most in the fourth quarter. Previously, in the third quarter, Tesla sold a record 497,099 vehicles, which was a 29 percent increase. Buyers were rushing to buy EVs before the tax credit ended. Unfortunately, sales went down even though Tesla made efforts to attract more customers.

Meanwhile, CEO Elon Musk is shifting Tesla’s focus from making EVs to working on AI and robotics. He believes there is a lot of money to be made from “sustainable abundance,” a term used in the company’s Master Plan IV. This plan talks about making a variety of eco-friendly products, such as electric transport and battery storage.

Still, making and selling EVs is where most of Tesla’s money comes from. For example, in the third quarter, Tesla made $28 billion in total revenue, with $21.2 billion of that coming from selling EVs.