In 2011, Tesla CEO Elon Musk named Chinese electric vehicle manufacturer BYD a rival. But about 14 years later, BYD surpassed the American EV pioneer in its own game.
According to 2025 figures published by the two competitors this week, the Chinese automotive giant overtook Tesla to become the world’s largest seller of electric vehicles.
BYD announced on Thursday that it sold 2.26 million electric vehicles, nearly 28% more than in 2024. Meanwhile, Tesla reported its second consecutive year of falling sales on Friday, with deliveries declining by 8.6% to just 1.6 million, marking the largest annual drop in the company’s history.
BYD managed to overtake Tesla even though its electric vehicles are unavailable for purchase in America, and China is Tesla’s second-largest market.
In the fourth quarter, Tesla’s sales were about 418,000, a decrease of 15.6% from a year earlier, and an even steeper reduction compared to the record global sales in the third quarter when American motorists rushed to buy EVs before the $7,500 tax credit expired on October 1st.
Unlike other automakers, Tesla does not report sales by market, providing only global data, but according to company reports, the U.S. market accounts for nearly half of its revenue. Reports from other automakers published on Monday are also likely to show weak EV sales in the U.S. during the last three months of 2025.
Tesla’s deliveries once grew by nearly 50% annually. However, in 2024, it registered its first year-over-year sales decline, recording a modest drop of 1%. Sales plunged in the first six months of 2025 due to heightened competition from EVs of other manufacturers, such as BYD and established global automakers, as well as backlash against Musk’s political activities, which alienated many prospective buyers in America and Europe.
Earlier in the year, when Musk headed the Trump administration’s Efficiency Department, Tesla showrooms in Europe and the U.S. regularly saw demonstrations, along with reports of vandalism to Tesla vehicles and properties.
The rush to take advantage of the soon-to-expire tax incentive supported third-quarter sales. But it likely pulled forward purchases from some buyers who might have acquired a Tesla later in the year.
To try to counter the loss of the tax credit, Tesla rolled out cheaper versions of its Model 3 and Model Y cars, but those versions, while costing about $5,000 less than their “premium” equivalents, also won’t travel as far on a full charge as the premium versions and lack some features.
Aggressive competition
BYD achieved the latest milestone while grappling with fierce competition and relentless price wars in its home market. The intense squeeze in China has prompted the Shenzhen-based company to expand further overseas, though its low-price strategy has drawn scrutiny and led to new tariffs in some markets.
Growth in BYD’s overall sales, including EVs and hybrids, slowed to its weakest pace in five years, with more than 4.6 million vehicles sold last year – underscoring the company’s struggles in China, the world’s largest automobile market and where BYD sells the bulk of its cars.
BYD also reported profit declines for both the second and third quarters of 2025.
While China’s auto market has become less crowded in the past few years, competition remains stiff with around 150 car brands and more than 50 EV makers, according to HSBC’s research. Rivals like Geely, China’s second-largest EV maker, fast-rising competitor Leapmotor and latecomer Xiaomi, which debuted its first EV only in 2024, have gradually eroded BYD’s domestic market share.
From a peak of 35% in 2023, BYD’s market share dropped to 29% in the first 11 months of 2025, according to data from the China Passenger Car Association. During the same period last year, its sales declined by more than 5%, while Geely’s grew by almost 90%.
Wang Chuanfu, BYD’s founder and CEO, attributed the slowdown in domestic sales to a decrease in BYD’s technological leadership and insufficient product differentiation at a December meeting with investors, according to state media. However, he added that the firm would soon introduce new technologies.
Tesla (TSLA) shares rose 1.2% in early Friday trading. The stock closed 2025 up 18.6% for the year, as investors overlooked weak sales and focused on Musk’s plans for a robotaxi fleet and an army of humanoid robots he promised to build soon. But so far, Tesla’s robotaxi service launch has significantly underdelivered on his promises, being confined to two metropolitan areas—Austin, Texas, and San Francisco—instead of serving half the U.S. population as he projected by year-end.
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