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China’s BYD has overtaken Elon Musk’s Tesla to become the world’s largest seller of electric vehicles, marking the first time the Chinese automaker has surpassed its U.S. rival in annual global sales.
BYD said on Thursday that sales of its battery-powered vehicles jumped nearly 28% in 2025 to more than 2.25 million units. A day later, Tesla reported that its global vehicle deliveries fell by almost 9% to 1.64 million cars — its second consecutive year of declining sales.
The figures underscore a shift in the global electric vehicle market, as Chinese manufacturers expand aggressively at home and abroad while Tesla grapples with slowing demand, rising competition and growing investor concerns about its growth outlook.
Tesla’s difficulties were particularly visible at the end of the year. The company said vehicle sales fell 16% in the final quarter of 2025, a decline partly attributed to the repeal of a U.S. government subsidy that had offered up to $7,500 in incentives for buyers of certain electric, plug-in hybrid and fuel-cell vehicles.
The removal of the subsidy dampened consumer demand at a time when Tesla was already facing pressure from cheaper competitors and a mixed reception to its newer models.
Wall Street analysts have since trimmed their sales forecasts for Tesla for 2026, reflecting a more cautious outlook for the company’s near-term growth.
Chinese manufacturers, including BYD, Geely and MG, have steadily increased pressure on Western carmakers by offering competitively priced electric vehicles with increasingly sophisticated features.
BYD, now China’s largest electric car company, has built its growth strategy around cost efficiency, vertical integration and aggressive pricing. Its vehicles are often sold at prices well below those of established Western brands, helping it gain market share in both emerging and developed markets.
Tesla responded to the intensifying competition in October by introducing lower-priced versions of its two best-selling models in the U.S., hoping to revive demand and defend its market position.
Elon Musk, the world’s richest person, faces mounting pressure to restore Tesla’s sales momentum and justify its lofty valuation.
In November, Tesla shareholders approved a new compensation package that could eventually pay Musk as much as $1 trillion if the company achieves a series of ambitious performance targets over the next decade. Those goals include dramatic increases in Tesla’s market capitalisation, vehicle sales and new business lines.
As part of Tesla’s long-term strategy, Musk has placed heavy emphasis on autonomous driving, robotaxis and humanoid robots. The company has invested heavily in its “Optimus” robot and its self-driving technology, which it hopes will open up new revenue streams beyond car sales.
Analysts say Tesla’s planned rollout of robotaxis and advanced self-driving features in 2026 — developments that have helped push its share price to record highs — will be crucial to its future performance.
“Tesla will own about 70% of the self-driving market over the next decade,” Dan Ives of Wedbush Securities said, arguing that no other company can match Tesla’s scale, data advantage and integrated ecosystem.
Still, doubts remain about how quickly and safely Tesla can deploy fully autonomous systems, and whether consumers and regulators will embrace them at scale.
Some investors have also questioned whether Musk’s many other commitments have distracted him from running Tesla.
Beyond Tesla, Musk controls SpaceX, the social media platform X and the Boring Company. He also took on a prominent role in U.S. President Donald Trump’s administration last year, heading the Department of Government Efficiency (Doge), a move that drew criticism from some shareholders who feared he was not sufficiently focused on Tesla.
Musk has since stepped back from his government role, seeking to reassure investors that Tesla remains his top priority.
While BYD has overtaken Tesla in unit sales, its growth has also shown signs of slowing. The company said its sales growth rate in 2025 was the weakest in five years, reflecting fierce price competition in China, its largest market.
Even so, BYD remains a dominant global force in electric vehicles. The Shenzhen-based company has rapidly expanded into Latin America, Southeast Asia and Europe, despite many governments imposing steep tariffs on Chinese EV imports.
In October, BYD said the UK had become its largest overseas market. The company reported that its sales in Britain surged by 880% in the year to the end of September, driven largely by strong demand for the plug-in hybrid version of its Seal U sports utility vehicle.
