Tesla reported on Friday that electric vehicle sales fell for the second consecutive year as the phaseout of the $7,500 federal electric vehicle tax credit and increasing competition weighed on demand. Tesla has lost its title as the world’s best-selling electric car maker as sales slump.
The company said it delivered 1.64 million vehicles in 2025, down 9% from 1.79 million in 2024. Fourth-quarter sales also fell 15.6% to 418,227 units, below the 440,000 units expected by analysts polled by FactSet.
China’s BYD sold 2.26 million vehicles last year and is now the world’s largest electric car maker.
Tesla faces stiff competition from rival automakers and Backlash from some consumers On CEO Elon Musk’s relationship with the Trump administration. Musk previously led the Department of Government Effectiveness (DOGE), where he previously oversaw cuts to the government workforce and several funding programs. Take a step back in May Refocus on Tesla.
Meanwhile, the expiration of last fall’s $7,500 electric vehicle tax credit could hurt demand by removing incentives that lured some consumers to buy or lease electric vehicles, which tend to be more expensive than gasoline-powered vehicles.
Despite these challenges, Tesla’s stock is up about 11% in 2025 as investors hope Musk can realize his ambition to make the company a leader in robotaxi services and for consumers to embrace humanoid robots that can perform basic tasks in homes and offices.
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