KATHMANDU: Tesla has lost its position as the world’s largest electric vehicle (EV) maker to China’s BYD in 2025, as global competition intensified and the expiration of U.S. tax incentives weighed on demand.
According to Reuters, Tesla’s annual vehicle deliveries declined for the second consecutive year, while BYD recorded strong growth, particularly outside China. Global EV sales rose 28% last year, helping BYD overtake Tesla on an annual basis for the first time.
BYD benefited from rapid expansion in Europe and overseas markets. The Chinese automaker said its sales outside China reached a record 1 million vehicles in 2025, up around 150% from the previous year. BYD has set a target of selling up to 1.6 million vehicles outside China in 2026.
In contrast, Tesla delivered 1.64 million vehicles globally in 2025, down from 1.79 million units a year earlier. Analysts had expected deliveries of about 1.65 million vehicles, marking Tesla’s second straight annual decline.
Tesla’s fourth-quarter deliveries fell 15.6% year-on-year to 418,227 units, missing market expectations. Earlier in the year, third-quarter deliveries were boosted by customers rushing to secure U.S. EV tax credits before they expired at the end of September. Demand weakened sharply after the $7,500 federal incentive ended.
Analysts noted that EV demand in the U.S. softened after the tax credit rollback, while Tesla also faced growing pressure in North America and Europe from Chinese brands and legacy automakers such as Volkswagen and BMW.
Brand perception issues linked to CEO Elon Musk’s political statements further weighed on sales in key markets.
To support volumes, Tesla introduced lower-priced “Standard” versions of the Model Y and Model 3 in October, priced around $5,000 below previous base models. However, the move disappointed some investors who were expecting deeper price cuts or a new mass-market model.
Despite weaker vehicle deliveries, Tesla’s stock rose about 11.4% in 2025. Market sentiment continues to be driven by the company’s long-term projects, including robotaxis and autonomous driving.
