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A new era in the electric vehicle industry has begun as China’s BYD outpaced Elon Musk’s Tesla in annual sales for the first time. The milestone comes as Tesla faces a prolonged slump, with 2025 deliveries falling to 1.64 million vehicles—a 9% drop. Meanwhile, BYD’s rapid expansion continued unabated, with the company reporting on Thursday that its 2025 sales topped 2.25 million units, cementing its position as the global market leader over its American counterpart.
The US firm has faced a tough year with a mixed reception to new offerings, unease over Musk's political activities and intensifying competition from Chinese rivals.
For the last three months of 2025, Tesla's car sales fell 16%. The drop was partly due to the repeal of a government subsidy that had helped knock as much as $7,500 (£5,570) off the price of certain battery electric, plug-in hybrid or fuel cell vehicles.
Chinese firms such as Geely, MG, and BYD - now the country's largest electric car company - have put pressure on Western rivals by pricing their vehicles below established brands.
In October, Tesla responded by launching lower-priced versions of its two best selling models in the US in a bid to boost sales.
Musk, who is already the world's richest man, is tasked with significantly boosting Tesla's sales and stock market value over the next decade to secure a record-breaking pay package. The deal, which was approved by shareholders in November, could see him getting a payout of as much as $1tn (£740bn).
As part of the agreement, Musk also has to sell a million humanoid robots over the next ten years. Tesla has invested heavily in its "Optimus" product and self-driving "Robotaxis".
Tesla sales slumped in the first three months of 2025 after a backlash against Musk's role in US President Donald Trump's administration.
