Key Points
- Tesla’s global sales fell 9% in 2025, marking the second consecutive annual decline.
- The loss of the $7,500 U.S. tax credit was a major reason for the decline.
- Chinese automaker BYD has surpassed Tesla as the world’s top EV seller.
- This comes as Elon Musk is trying to pivot Tesla into an AI and robotics company.
Tesla’s annual sales have fallen for the second consecutive year. The electric car giant delivered 1.63 million vehicles in 2025, a 9% decline from 1.79 million in 2024. The fourth quarter was particularly rough, with sales falling nearly 16% compared to the same period last year. This news sent Tesla’s stock down more than 2% at the start of the new year.
Two major factors are behind this decline. First, the $7,500 U.S. federal tax credit for EVs disappeared at the end of the year. This created a surge of buyers in the third quarter, when Tesla sold a record number of cars. But once the credit was gone, sales plummeted.
Second, Tesla is facing intense competition from Chinese automakers. While Tesla was once the undisputed king of EVs, China’s BYD has now taken the top spot, delivering 2.26 million electric vehicles in 2025.
While Chinese cars aren’t sold in the U.S., they are eroding Tesla’s market share in key markets such as Europe and China.
This sales slump comes at a strange time for the company. CEO Elon Musk has been trying to shift the focus away from just making and selling cars. He wants to rebrand Tesla as an AI and robotics company, talking about a future of “sustainable abundance” that includes everything from energy storage to humanoid robots.
However, the vast majority of Tesla’s revenue still comes from selling cars. In the third quarter, for example, EVs accounted for over $21 billion of the company’s $28 billion in revenue. With sales now falling for two consecutive years, it seems the pivot to AI and robotics can’t come fast enough.
