China’s BYD has overtaken Tesla to become the world’s largest seller of electric vehicles, marking the first time the Chinese group has outpaced its US rival in annual sales.
Tesla said that global vehicle deliveries fell by nearly 9% in 2025 to 1.64 million units, its second consecutive year of declining sales. The figures place the company behind BYD, which reported on Thursday that sales of its battery-electric vehicles rose by almost 28% last year to more than 2.25 million.
Tesla faced a difficult year amid a mixed reception to new models, investor unease over the political activities of chief executive Elon Musk, and intensifying competition from Chinese carmakers. Deliveries dropped 16% in the final quarter of 2025, partly reflecting the repeal of a government subsidy that had reduced the purchase price of some electric and hybrid vehicles by up to $7,500 (£5,570).
Wall Street analysts have lowered their sales forecasts for Tesla in 2026, signalling a more cautious outlook. Chinese manufacturers including Geely, MG and BYD have increased pressure on Western rivals by offering lower-priced vehicles.
Tesla responded in October by launching cheaper versions of its two best-selling models in the US in an effort to revive demand.
Under a pay agreement approved by shareholders in November, Musk is required to deliver substantial growth in Tesla’s sales and market value over the coming decade. The package could result in a payout of up to $1tn (£740bn) if performance targets are met and also includes commitments linked to Tesla’s investments in humanoid robots and self-driving technology.
Analysts say the planned rollout of Tesla’s robotaxi and autonomous driving systems in 2026 will be critical to its future performance. Dan Ives of Wedbush Securities has said Tesla could command around 70% of the self-driving market over the next decade, citing the company’s scale and technological reach.
Musk’s broader business interests, including social media platform X, rocket company SpaceX and the Boring Company, have previously raised concerns among some investors about his focus on Tesla. He has since stepped back from his role in the US government.
Despite surpassing Tesla in vehicle sales, BYD’s growth slowed in 2025 to its weakest pace in five years amid fierce competition in China, its largest market. Tesla has nevertheless remained more profitable in recent quarters.
Still, BYD continues to expand internationally, with rapid growth in Latin America, South East Asia and parts of Europe, despite higher tariffs on Chinese-made electric vehicles in several markets. The Shenzhen-based company said in October that the UK had become its largest market outside China, with sales in Britain rising 880% in the year to the end of September, driven by demand for the plug-in hybrid version of its Seal U sport utility vehicle.
