Tesla’s slide in global electric-vehicle sales accelerated at the start of 2026, with the company reporting weaker results for both its fourth quarter and its full year. Tesla said it delivered 1.64 million vehicles in 2025, a 9% decline from a year earlier, and it lost the title of the world’s top electric-vehicle maker to China’s BYD, which sold 2.26 million vehicles last year, according to a report published by the Associated Press.
The change in leadership came as Tesla said its fourth-quarter sales totaled 418,227 vehicles, missing analysts’ expectations. The AP report said the results fell short even of a reduced target of 440,000 vehicles that analysts had polled by FactSet expected.
In the AP account, Tesla’s full-year decline reflected multiple pressures converging on demand, including a customer pullback tied to Elon Musk’s politics, the expiration of U.S. incentives for buyers, and intensifying competition overseas. The report said the U.S. tax credit for electric-vehicle purchases—phased out by the Trump administration—ended at the close of September.
The AP report also highlighted how the company has been trying to counter weakening car demand while investors look toward future growth areas. It said Tesla is betting on robotaxi services, energy storage, and a push into robotics, rather than relying as heavily on vehicle sales alone.
In early October, Tesla began selling “stripped-down” versions of the Model Y and Model 3, with the company describing the move as part of an effort to revive sales. The AP report said the updated Model Y costs just under $40,000, while the cheaper Model 3 is priced under $37,000, and it said those versions are expected to help Tesla compete with Chinese models in Europe and Asia.
Tesla’s stock fell 2.6% to $438.07 on Friday, the AP report said, while noting that investors still finished 2025 with roughly an 11% gain for the year. Analysts cited by the report were expecting Tesla, for fourth-quarter earnings due in late January, to post a 3% drop in sales and nearly a 40% drop in earnings per share, according to FactSet.
The AP report connected the outlook to Tesla’s autonomous-driving strategy, saying the company has been rolling out its robotaxi service in Austin starting in June, first with safety monitors and then testing without them. The company hopes to expand the service to several cities this year, which analysts said will require navigating safety rules and regulator scrutiny.
“We’re dealing with people’s lives,” Wedbush Securities analyst Dan Ives said, according to the Associated Press report. The report said Ives expects Tesla’s autonomous offerings to overcome setbacks, while also describing that the company faces multiple federal safety investigations and other probes, and that a California judge has ruled Tesla misled customers about safety—leaving Tesla at risk of temporarily losing its license to sell cars in the state.
For its longer-term ambition, the AP report said Musk has told investors he expects software updates to allow hundreds of thousands of Tesla vehicles to operate autonomously with zero human intervention by the end of this year, and that Tesla plans to begin producing its AI-powered Cybercab next year with no steering wheel or pedals. It also said Tesla’s directors awarded Musk a potentially large pay package that shareholders backed in November, and that Musk’s pay package later faced a reversal in Delaware courts in a way that restored a portion of a $55 billion figure.
Note: An earlier version of the Associated Press report misstated BYD’s 2025 sales figure; the report was corrected to show BYD sold 2.26 million vehicles last year, not 2.26.