Shenzhen, China – China's BYD has officially overtaken Tesla as the world's largest electric vehicle (EV) maker by annual sales in 2025. This historic shift comes as Tesla reported a second consecutive year of declining vehicle deliveries, facing increased competition and evolving market dynamics.
BYD, based in Shenzhen, China, sold approximately 2.26 million battery-electric vehicles (BEVs) in 2025. This figure represents a significant increase of nearly 28% from its sales in the prior year. Including its plug-in hybrid lineup, BYD's total "new energy vehicle" sales reached roughly 4.6 million units in 2025. The company's strong performance allowed it to claim the global sales champion title for new energy vehicles for the second year in a row.[rnz+17]
Tesla's Declining Deliveries
In contrast, Tesla reported its 2025 deliveries fell to about 1.64 million vehicles globally. This marks an 8.6% to 9% drop compared to its 2024 sales. Tesla's deliveries peaked in 2023 with over 1.8 million vehicles. However, sales saw their first annual decline in 2024, dropping to approximately 1.79 million units. The 2025 figures confirm a second consecutive year of shrinking sales for the American automaker.[trtworld+20]
For the fourth quarter of 2025, Tesla delivered 418,227 vehicles. This fell short of analysts' expectations, which had predicted around 440,000 units. The quarterly deliveries declined by about 15.6% year-on-year.[fortune+9]
Factors Behind the Shift
Several factors contributed to Tesla's sales downturn and BYD's ascent. Increased competition in the global EV market, particularly from Chinese manufacturers and established European giants, played a significant role. The expiration of a $7,500 US federal tax credit for EVs at the end of September 2025 also impacted demand for Tesla's vehicles. Some reports also cited "brand backlash" and "customer revolt over Elon Musk's right-wing politics" as contributing to softer demand.[rnz+10]
BYD's success is attributed to its aggressive pricing strategies, a wide range of mass-market models, and robust local supply chains. The company sells everything from affordable city cars to premium sedans. BYD has also rapidly expanded its exports to regions like Europe, Southeast Asia, Latin America, and the Middle East. In 2023, BYD's international market presence surged, with exports growing by 334.2% to 242,765 units.[rnz+13]
Musk's Shifting Focus and Past Remarks
Tesla CEO Elon Musk previously dismissed BYD as a serious competitor. In 2011, when asked about BYD, Musk famously chuckled and questioned the quality of their cars. However, more recently, Musk acknowledged that BYD's vehicles "are highly competitive these days."[m+1]
Musk has also indicated a strategic shift for Tesla, stating that it is primarily "an AI/robotics company that appears to many to be a car company." He suggests that plunging car sales may not matter as much as the company's future in robotaxi services, energy storage, and humanoid robots. Investors, according to some analysts, are increasingly focusing on these future ventures rather than current delivery numbers.[reddit+6]
Market Reaction and Outlook
Despite the decline in sales, Tesla's stock showed some resilience, gaining about 11% in 2025. This indicates that the market might be factoring in Musk's long-term vision for AI and autonomous technology. Analysts like Dennis Dick, a trader at Triple D Trading, noted that investors are "so focused on the future with Tesla that they are ignoring delivery numbers."[pbs+4]
The shift in market leadership highlights a transitional phase in the global EV industry. Factors such as scale, product mix, pricing, and domestic market strength are becoming increasingly important. BYD's rise underscores the growing importance of the Chinese market in global electrification. While BYD faces tariffs in the United States, its expansion in other overseas markets continues.[rnz+3]
The increasing competition and evolving consumer preferences suggest a dynamic future for the electric vehicle industry. Both Tesla and BYD are expected to continue innovating and adapting their strategies in the coming years.[rnz+1]
