Tesla loses title as world's biggest electric vehicle maker as sales
fall for second year in a row
[January 02, 2026] NEW
YORK (AP) — Tesla lost its crown as the world’s bestselling electric
vehicle maker on Friday as a customer revolt over Elon Musk’s right-wing
politics, expiring U.S. tax breaks for buyers and stiff overseas
competition pushed sales down for a second year in a row.
Tesla said that it delivered 1.64 million vehicles in 2025, down 9% from
a year earlier.
Chinese rival BYD, which sold 2.26 million vehicles last year, is now
the biggest EV maker.
It's a stunning reversal for a car company whose rise once seemed
unstoppable as it overtook traditional automakers with far more
resources and helped make Musk the world's richest man.
For the fourth quarter, sales totaled 418,227, falling short of even the
much reduced 440,000 target that analysts recently polled by FactSet had
expected. Sales were hit hard by the expiration of a $7,500 tax credit
for electric vehicle purchases that was phased out by the Trump
administration at the end of September.
Tesla stock was down nearly 2% at $441.15 in early afternoon trading
Friday.
Even with multiple issues buffeting the company, investors are betting
that Tesla CEO Musk can deliver on his ambitions to make Tesla a leader
in robotaxi services and get consumers to embrace humanoid robots that
can perform basic tasks in homes and offices. Reflecting that optimism,
the stock finished 2025 with a gain of approximately 11%.
The latest quarter was the first with sales of stripped-down versions of
the Model Y and Model 3 that Musk unveiled in early October as part of
an effort to revive sales. The new Model Y costs just under $40,000
while customers can buy the cheaper Model 3 for under $37,000. Those
versions are expected to help Tesla compete with Chinese models in
Europe and Asia.
For fourth-quarter earnings coming out in late January, analysts are
expecting the company to post a 3% drop in sales and a nearly 40% drop
in earnings per share, according to FactSet. Analysts expect the
downward trend in sales and profits to eventually reverse itself as 2026
rolls along.
Investors have largely shrugged off the falling numbers, choosing to
focus on Musk's pivot to different parts of business. He has been saying
the future of the company lies with its driverless robotaxis service,
its energy storage business and building robots for the home and factory
— and much less with car sales.
Tesla started rolling out its robotaxi service in Austin earlier this
year, first with safety monitors in the cars to take over in case of
trouble, then testing without them. The company hopes to roll out the
service in several cities this year.
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The Tesla logo is displayed at a Tesla dealership Thursday, Mar. 13,
2025, in Miami. (AP Photo/Lynne Sladky, File)
To do that successfully, it needs to
take on rival Waymo, which has been operating autonomous taxis for
years and has far more customers. It also will also have to contend
with regulatory challenges. The company is under several federal
safety investigations and other probes. In California, Tesla is at
risk of temporarily losing its license to sell cars in the state
after a judge there ruled it had misled customers about their
safety.
“Regulatory is going to be a big issue,” said Wedbush Securities
analyst Dan Ives, a well-known bull on the stock. “We're dealing
with people's lives.”
Still, Ives said he expects Tesla's autonomous offerings will soon
overcome any setbacks.
Musk has said he hopes software updates to his cars will enable
hundreds of thousands of Tesla vehicles to operate autonomously with
zero human intervention by the end of this year. The company is also
planning to begin production of its AI-powered Cybercab with no
steering wheel or pedals in 2026.
To keep Musk focused on the company, Tesla’s directors awarded Musk
a potentially enormous new pay package that shareholders backed at
the annual meeting in November.
Musk scored another huge windfall two weeks ago when the Delaware
Supreme Court reversed a decision that deprived him of a $55 billion
pay package that Tesla doled out in 2018.
Musk could become the world's first trillionaire later this year
when he sells shares of his rocket company SpaceX to the public for
the first time in what analysts expect would be a blockbuster
initial public offering. ____
This story has been corrected to show that BYD sold 2.26 million
vehicles last year, not 2.26.
AP video journalist Mustakim Hasnath contributed to this report from
London.
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