For the first time in years, Tesla isn’t sitting on top of the electric-vehicle world. The company that once made EV dominance look inevitable has officially ceded its global sales crown, as a mix of customer backlash, policy headwinds, and increasingly competent rivals took their toll.

Tesla says it delivered 1.64 million vehicles in 2025, a 9 percent decline from the year before and the second straight annual drop. That slide was enough to push the brand out of first place, overtaken by China’s BYD, which moved 2.26 million electric vehicles over the same period. The numbers, first reported by the Associated Press, mark a symbolic turning point: Tesla is no longer the default leader in a market it helped create.

The slowdown was especially visible at the end of the year. Fourth-quarter deliveries came in at 418,227 vehicles—well short of the roughly 440,000 analysts had been expecting, according to FactSet. That shortfall underscores how thin the company’s margin for error has become, particularly as price cuts lose their shock value and competition tightens across every major market.

Policy didn’t help. The expiration of the $7,500 federal EV tax credit at the end of September—phased out under President Donald Trump’s administration—likely chilled demand in the U.S., where Tesla has long relied on incentives to keep monthly payments attractive. Pull that lever away, and suddenly a Model Y looks a lot more expensive next to a rapidly improving field of alternatives.

There’s also the Musk factor. Tesla’s polarizing CEO remains one of the brand’s greatest assets and biggest liabilities, with some customers openly rebelling against his politics and public persona. In a market that’s maturing—and one where buyers increasingly have choices—that kind of reputational drag matters more than it once did.

And yet, Wall Street remains oddly optimistic. Despite missed expectations and shrinking sales, Tesla stock finished 2025 up about 11 percent. Investors, it seems, are still buying the future rather than the present. Musk’s long-promised pivot toward robotaxi services and humanoid robots capable of basic household and office tasks continues to fuel hopes that Tesla is less a car company than a technology company waiting to cash in.

That may be true—but for now, the scoreboard is clear. Tesla is no longer the world’s best-selling EV manufacturer. Whether this moment marks a temporary stumble or a more permanent reshuffling of the electric order will depend on how quickly Tesla can turn ambition into reality—and how much patience buyers, and investors, are willing to keep.

Source: Tesla