Tesla sales fall for second consecutive year
China’s BYD has overtaken Tesla as the world’s largest seller of electric vehicles, marking the first time it has surpassed its US rival in annual sales. Tesla reported worldwide deliveries of 1.64 million vehicles in 2025, a decline of nearly 9% from the previous year and its second consecutive annual drop.
The figures placed Tesla behind BYD, which said sales of its battery powered vehicles rose by almost 28% in 2025 to more than 2.25 million units.
Competition and subsidies weigh on Tesla
Tesla faced a challenging year marked by mixed reception to new models, concerns over Elon Musk’s political activities, and intensifying competition from Chinese manufacturers. Sales fell 16% in the final quarter of 2025, partly reflecting the repeal of a government subsidy that had reduced prices by up to $7,500 on certain electric and hybrid vehicles.
Wall Street analysts have recently lowered their sales forecasts for Tesla in 2026, pointing to a more cautious outlook.
Chinese manufacturers increase global pressure
Chinese automakers such as BYD, Geely, and MG have increased pressure on Western rivals by offering vehicles at lower prices. In response, Tesla launched cheaper versions of its two best selling models in the US in October in an effort to stimulate demand.
Musk ambitions and future strategy
Elon Musk faces the task of significantly increasing Tesla’s sales and market value over the next decade to secure a shareholder approved compensation package that could be worth up to $1 trillion. The agreement also requires the sale of one million humanoid robots over ten years, alongside continued development of the company’s Optimus robot and self driving robotaxi technology.
Analysts say Tesla’s planned rollout of robotaxi and self driving services in 2026 will be critical to its performance. Some remain optimistic about Tesla’s prospects in autonomous driving, despite ongoing uncertainty around the technology.
BYD growth moderates but global reach expands
Although BYD’s sales growth slowed in 2025 to its weakest pace in five years, partly due to intense competition in China, the company remains a dominant global EV producer. Tesla has continued to report higher profitability in recent quarters, but BYD’s pricing strategy often undercuts rivals.
The Shenzhen based group has expanded rapidly in Latin America, Southeast Asia, and parts of Europe, despite higher tariffs on Chinese electric vehicles. In October, BYD said the UK had become its largest market outside China, with sales rising 880% in the year to the end of September, driven by demand for the plug in hybrid Seal U SUV.
