Tesla's electric vehicle sales declined 16 percent in the last three months of 2025, the company reported Friday, leading to BYD, a Chinese automaker, surpassing Tesla as the world's largest seller of electric vehicles for the first time. Tesla's overall sales for 2025 decreased by 9 percent, a contrast to gains made by other automakers in the electric vehicle market.

The shift in global leadership comes after Congress and President Trump eliminated federal tax credits that had previously incentivized electric vehicle purchases in the United States. The elimination of these credits is cited as a contributing factor to Tesla's sales decline.

Tesla's diminished sales figures mark a departure from the company's previous ambitions. The company had once aimed to sell 20 million cars annually by 2030, a figure approximately double Toyota's current sales volume. However, Elon Musk, Tesla's chief executive, has shifted the company's focus towards the development of self-driving cars and humanoid robots. These technologies, while promising, have yet to generate substantial revenue and face significant competition.

Despite the decline in global sales, Tesla remains the largest American manufacturer of electric vehicles. However, the company's recent performance raises concerns about a potential slowdown in the broader adoption of electric vehicles within the United States, a technology widely considered crucial for combating climate change.