Decline in sales comes amid outrage of Elon Musk’s political forays, end in US electric vehicle tax breaks.
Published On 2 Jan 2026
Tesla has lost its place as the top global seller of electric vehicles to Chinese company BYD, capping a year defined by outrage over CEO Elon Musk’s political manoeuvring and the end of United States tax breaks for customers.
The company revealed on Friday that it had sold 1.64 million vehicles in 2025, compared with BYD’s 2.26 million vehicles. The sales represented a 9 percent decline for Tesla from a year earlier.
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Tesla, founded in 2003, had for years far outpaced traditional automakers in its development and sale of electric vehicles. However, the market has become increasingly crowded with competitors, with China’s electric vehicle market bounding ahead.
Musk’s embrace of US President Donald Trump in 2024 and subsequent spearheading of a controversial “government efficiency” panel (DOGE) behind widespread layoffs of federal workers has also proved polarising. The political foray prompted protests at Tesla facilities and slumps in sales.
The company’s fourth quarter sales totaled 418,227, falling short of the much-reduced 440,000 target that analysts recently polled by FactSet, an investment research firm, had expected.
Musk left DOGE in May, in what was largely viewed as an effort to reassure investors.
Tesla was also hard hit 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. Trump’s opposition to electric vehicles has contributed to a strained relationship with Musk.
Despite the downward trends in sales, investors have generally remained optimistic about Tesla and Musk’s ambitious plans to make the company a leader in driverless robotaxi services and humanoid robots for homes.
Reflecting that optimism, Tesla stock finished 2025 up about 11 percent.
Tesla has also recently introduced two less expensive electric vehicle models, the Model Y and Model 3, meant to compete with cheaper Chinese models for sale in Europe and Asia.
Musk entered 2026 as the wealthiest person in the world.
It is widely believed that the public offering of his rocket company, SpaceX, set for later this year, could make the 54-year-old the world’s first trillionaire.
In November, Tesla’s directors awarded Musk a potentially historic pay package of nearly $1 trillion if ambitious performance targets were met.
Musk scored another huge win in December,when the Delaware Supreme Court reversed a lower court’s ruling, awarding him a $55bn pay package that had been paused since 2018.
Conversely, Tesla is at risk of temporarily losing its licence to sell cars in California after a judge there ruled it had misled customers about the safety of its driverless taxis.
