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China's BYD has finally closed on Elon Musk's Tesla to become the world's leading seller of electric vehicles (EVs) for a full calendar year.
Tesla confirmed on Friday that its global deliveries fell by nearly 9% in 2025 to 1.64 million vehicles. This represents a second consecutive year of decline for the US carmaker. In contrast, BYD reported on Thursday that sales of its fully electric models surged by almost 28%, reaching over 2.25 million units.
The American firm has endured a difficult twelve months, facing mixed reviews for new models, unease regarding Musk's political stance, and aggressive pricing from Chinese competitors. Tesla's figures dipped 16% in the final quarter of 2025 alone. This slump was partly driven by the removal of a crucial government subsidy that had previously cut up to $7,500 (£5,570) from the cost of eligible electric cars.
Wall Street analysts have subsequently downgraded sales forecasts for 2026, pointing to a challenging road ahead.
Chinese brands like Geely and MG have joined BYD in squeezing Western rivals by offering cheaper alternatives. Tesla attempted to counter this in October by introducing lower-cost versions of its popular models.
Mr Musk, the world's wealthiest individual, faces the challenge of revitalising Tesla's stock value and sales to secure a historic compensation package. Approved by shareholders in November, the deal could yield a payout reaching $1tn (£740bn).
The agreement requires Musk to sell one million humanoid robots within a decade. Tesla has poured resources into its "Optimus" robot and autonomous "Robotaxis". Experts suggest the 2026 rollout of self-driving technology is vital to the company's performance. Dan Ives of Wedbush Securities believes Tesla will dominate 70% of the autonomous market, claiming no rival can match its scale.
Beyond cars, Musk's attention is split between platform X, SpaceX, and the Boring Company. His recent leadership of President Trump's Department of Government Efficiency (Doge) led to investor concern that he was distracted, though he has since stepped back.
While BYD has surged past Tesla in volume, the US firm remains more profitable. However, the Shenzhen-based company is expanding rapidly abroad despite steep tariffs. In the UK, its sales jumped 880% last year, driven by demand for its Seal U SUV.