Becky Peterson and Joseph De Avila report in the Wall Street Journal:
Tesla, once the top seller of electric vehicles, lost first place to China’s BYD after reporting annual vehicle-delivery declines for the second year in a row. Tesla sales were down 9% for all of 2025 and dropped 16% for the fourth quarter compared with a year prior. CEO Elon Musk had a controversial role in the White House overseeing the Department of Government Efficiency. That caused backlash at some Tesla showrooms across the U.S. and pullback in sales.
Tesla, once the top seller of electric vehicles, lost first place to China’s BYD after reporting annual vehicle-delivery declines for the second year in a row.
Tesla sales were down 9% for all of 2025 and dropped 16% for the fourth quarter compared with a year prior.
The EV maker is adjusting to a shopping landscape disrupted by the end of federal subsidies. The company saw a surprise sales boost in the third quarter as U.S. buyers rushed to take advantage of the expiring $7,500 tax rebate. For the fourth quarter there was no special incentive.
Tesla shares slumped 2.59% Friday, marking seven straight sessions of declines—the company’s longest losing streak since April 2024. Tesla stock is down more than 10% over those seven sessions.
Chinese carmaker BYD, which doesn’t sell vehicles in the U.S., said late Thursday that it sold 2.26 million battery electric vehicles last year, up 28% from the year before. Tesla meanwhile said it sold 1.64 million vehicles in 2025.
For BYD, the milestone is significant and its shares, traded in Hong Kong, closed up 3.6%. It was only a few years ago that the Chinese auto company’s founder worried that BYD might not survive.
The company still faces increasing competition from companies such as Geely and Leapmotor in China’s budget-car market. Geely increased EV production by 39% last year. Leapmotor, once a smaller player in China’s EV market, hit its 500,000-unit target for 2025 ahead of schedule and set an ambitious goal of one million cars for 2026.
For Tesla, 2025 was a year like no other. At the start of the year, CEO Elon Musk had a controversial role in the White House overseeing the Department of Government Efficiency. That caused backlash at some Tesla showrooms across the U.S. and pullback in sales.
Despite that, Musk has projected confidence focusing on the new products Tesla is bringing to market including robotaxis, the steering-wheel free Cybercab and the Optimus humanoid robots. But car sales are still Tesla’s main source of sales, contributing about three-fourths of its revenue.
Tesla’s final quarterly tally was 418,227 EVs delivered. Tesla missed analysts’ estimates of 422,850 deliveries, according to an average of 20 projections published by the company.
Tesla also reported 49% growth in its energy business.
Tesla’s fourth-quarter hangover from the expiration of the EV tax credits was expected, William Blair analyst Jed Dorsheimer said in a note. The weak fourth quarter “will have little influence on the stock, which is valued almost entirely on the transformation to real-world AI,” he said.
Tesla missed analysts’ expectations while dealing with the challenges of the expiring tax credits and headwinds in Europe, said Dan Ives, global head of tech research at Wedbush Securities, adding that sales were still better than where some “whisper numbers” put them.
“This will be viewed as better than feared deliveries and a step in the right direction for the Tesla story heading into 2026,” Ives said.
In October, Tesla released cheaper, stripped-down versions of its popular Model 3 sedan and Model Y SUV in an effort to spur demand. Still, U.S. sales fell in the first two months of the quarter, according to industry data.
In November, shareholders approved a new pay package for Musk that could make him the world’s first trillionaire, if he succeeds in increasing Tesla’s market cap to $8.5 trillion, while hitting a series of financial and operational goals, including selling more vehicles and launching its robotics business.
Tesla chair Robyn Denholm said the record-setting package is necessary to keep Musk focused and engaged through the next stage of the company’s growth.
Tesla has described the objective of its next phase of growth as “sustainable abundance.” In a master plan released over summer, the company laid out a vision in which artificial intelligence, robotics and energy storage systems eliminate scarcity.
“The tools we are going to develop will help us build the kind of world that we’ve always dreamed of—a world of sustainable abundance—by redefining the fundamental building blocks of labor, mobility and energy at scale and for all,” the company wrote.
In December, Tesla started testing fully autonomous robotaxis in Austin, Texas, after launching a pilot program with safety drivers in the front passenger seat in June.
Tesla also offers rides in the Bay Area in vehicles with drivers behind the wheel, and it announced plans to expand its services to Arizona, Nevada and Florida.
Musk said he expects there to be hundreds of thousands of Teslas driving fully autonomously on roads in the U.S. by the end of the year, many of which would be personally owned vehicles. The company plans to start production on its dedicated autonomous vehicle, the Cybercab, this year.
Tesla struggled in Europe last year. The automaker registered 25,477 cars in 2025 in France, a 37% decline from a year earlier, according to the nation’s automobile association. Tesla’s registrations across Europe dropped 39% through the first 11 months of 2025, according to the European Automobile Manufacturers’ Association.
Ives, of Wedbush Securities, said Tesla could reach a market cap of between $2 trillion and $3 trillion by the end of 2026 based on its plans for autonomous vehicles and robotics. Tesla will own about 70% of the global autonomous market over the next decade, he said.
“No other company in the world can match the scale and scope of Tesla coupled with its broadening AI footprint,” Ives said.
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