Tesla lost its place as the world’s bestselling electric-vehicle maker as BYD took the lead, with Tesla’s 2025 deliveries down for a second straight year, according to a report published Friday by The Associated Press. Tesla said it delivered 1.64 million vehicles in 2025, a 9% decline from the year before, as the market response to the company’s leadership and the timing of incentives weighed on demand.
The AP reported that BYD sold 2.26 million vehicles last year and is now the largest EV maker. The comparison helped mark a reversal for Tesla, which the story said had previously seemed on a path of momentum that allowed it to outpace traditional automakers and helped make Elon Musk the world’s richest man.
For the fourth quarter, Tesla sales totaled 418,227, the AP reported, and fell short of even a reduced 440,000 target that analysts polled by FactSet had expected. The AP also said Tesla shares fell 2.6% to $438.07 on Friday.
The AP attributed part of the sales pressure to the end of U.S. support for buyers. It said Tesla’s sales were hit hard by the expiration of a $7,500 tax credit for electric vehicle purchases that was phased out by the Trump administration at the end of September.
The AP also described competition abroad as a second headwind for Tesla. It said stiff overseas competition contributed to the sales decline, and positioned the BYD figure as evidence of increasing challengers outside the U.S. market.
The report noted Tesla’s response to the slowdown, including changes to its lineup. It said the latest quarter was the first with sales of stripped-down versions of the Model Y and Model 3 that Musk unveiled in early October, and it said the new Model Y costs just under $40,000 while the cheaper Model 3 can be bought for under $37,000.
While the sales figures pointed to pressure in car demand, investors continued to focus on Musk’s broader plans, the AP reported. The story said Tesla has been rolling out robotaxi service in Austin since June, initially with safety monitors to take over in case of trouble and then testing without them, and that the company hopes to expand the service to several cities this year.
The AP also said Tesla faces regulatory and safety scrutiny as it seeks to scale autonomous offerings. It reported that the company is under several federal safety investigations and other probes, and that in California a judge ruled Tesla misled customers about their safety, leaving the company at risk of temporarily losing its license to sell cars in the state.
Wedbush Securities analyst Dan Ives, described by the AP as a well-known bull on Tesla, said: “Regulatory is going to be a big issue. We’re dealing with people’s lives.” The AP said Ives still expects Tesla’s autonomous offerings to overcome setbacks.
Musk has also tied Tesla’s future to software and new products, the AP reported. It said Musk hopes software updates will enable hundreds of thousands of Tesla vehicles to operate autonomously with zero human intervention by the end of the year, and it said the company plans to begin production of its AI-powered Cybercab with no steering wheel or pedals in 2026.
The AP said Tesla directors awarded Musk a potentially large new pay package that shareholders backed at the company’s annual meeting in November, and it added that Musk won another major legal decision when the Delaware Supreme Court reversed a ruling that had deprived him of a $55 billion pay package Tesla approved in 2018. The report also said Musk could become the world’s first trillionaire later this year if SpaceX sells shares to the public for the first time, in what analysts expect would be a blockbuster initial public offering.