Asger Risom
Falling deliveries, political backlash tied to Elon Musk, and intensifying competition abroad have combined to reshape the balance of power in the EV industry.
Tesla’s long run as the world’s leading electric vehicle maker has come to an end, underscoring how quickly the competitive landscape is shifting for the company once seen as untouchable.
Falling deliveries, political backlash tied to Elon Musk, and intensifying competition abroad have combined to reshape the balance of power in the EV industry.
Losing the crown
Tesla reported delivering 1.64 million vehicles in 2025, a 9% decline from the previous year, according to figures cited by the Associated Press.
That drop allowed China’s BYD, which sold 2.26 million electric vehicles last year, to overtake Tesla as the world’s largest EV manufacturer. The shift marks a dramatic reversal for Musk, who previously brushed off BYD as a serious rival.
Pressure points
Several forces weighed on Tesla’s performance. According to the AP, some customers turned away from the brand in response to Musk’s right-wing political positions, while overseas rivals continued to gain ground with lower-priced models.
In the United States, the expiration of a $7,500 federal tax credit at the end of September also hit demand. Fourth-quarter deliveries reached 418,227 vehicles, well below the 440,000 analysts surveyed by FactSet had expected.
Market reaction
Despite the disappointing numbers, Tesla shares rose slightly in early trading Friday and ended 2025 up about 11% overall.
Investors appear to be looking past current sales trends and focusing instead on Musk’s longer-term ambitions, including autonomous robotaxis, humanoid robots, and Tesla’s energy storage business.
New models, modest relief
The fourth quarter marked the first sales of lower-cost versions of the Model Y and Model 3, unveiled in October as part of an effort to revive demand.
The new Model Y is priced just under $40,000, while the cheaper Model 3 comes in below $37,000. Analysts expect those models to help Tesla better compete with Chinese automakers in Europe and Asia.
Earnings expectations still fragile
Wall Street expects further near-term weakness. FactSet estimates point to a roughly 3% sales decline and nearly a 40% drop in earnings per share when Tesla reports fourth-quarter results later this month.
Still, analysts anticipate a gradual recovery through 2026. Musk has repeatedly argued that vehicle sales are becoming less central to Tesla’s future, which he says lies in autonomy, robotics, and energy.
That vision has been reinforced by Tesla’s board and shareholders, who approved a new compensation package for Musk. He also regained access to a separate $55 billion pay award after a recent ruling by the Delaware Supreme Court.
Sources: Tesla, FactSet
