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

Core Insights - Tesla's annual sales have declined for the second consecutive year, primarily due to the removal of the federal tax credit in the U.S. and increased competition from Chinese automakers [1][4] Sales Performance - Tesla delivered 1.63 million vehicles globally in 2025, marking a 9% decrease from 1.79 million in 2024 [1] - In the fourth quarter, Tesla reported sales of 418,227 vehicles, a 15.6% decline compared to the same period last year, which was significantly below analysts' expectations [2] Market Competition - Tesla's market share in Europe and China has been impacted by the rise of competitors like BYD, which delivered 2.26 million EVs in 2025, surpassing Tesla in global EV sales [3] - Although Tesla faces competition in the U.S., it is not from Chinese automakers due to restrictions on their sales in the country [3] Impact of Tax Incentives - The elimination of the $7,500 U.S. federal tax incentive has had a significant negative effect on Tesla's sales, particularly in the fourth quarter [4] - Prior to the tax credit's removal, Tesla achieved record sales of 497,099 vehicles in the third quarter, a 29% increase from the previous quarter, as consumers rushed to purchase EVs [4] Strategic Shift - CEO Elon Musk is attempting to pivot Tesla's focus from solely manufacturing and selling EVs to exploring opportunities in AI and robotics, promoting a vision of "sustainable abundance" [5] - Despite this strategic shift, the majority of Tesla's revenue still comes from its EV business, with $21.2 billion of the $28 billion generated in the third quarter derived from EV sales [6]