Tesla's annual vehicle deliveries experienced a 9% decline in 2025, falling to 1.63 million units globally compared to 1.79 million in 2024, according to figures released by the company. This decrease marks the second consecutive year of declining annual sales for the electric vehicle manufacturer.

The drop in sales was attributed to the removal of the federal tax credit in the United States and increased competition from Chinese automakers, particularly BYD, which delivered 2.26 million EVs in 2025, surpassing Tesla as the global EV sales leader. Tesla's fourth-quarter sales also saw a significant downturn, with 418,227 vehicles delivered, a 15.6% decrease from the same period last year. This figure fell short of analysts' expectations, further impacting investor confidence.

Approximately 50,850 of the vehicles delivered in 2025 were categorized as "other models," encompassing the Cybertruck, Model X, and Model S. The Cybertruck, Tesla's highly anticipated electric pickup truck, began deliveries in late 2025, but its impact on overall sales was limited due to initial production constraints.

Tesla's stock price reacted negatively to the news, falling more than 2% as the market opened after the New Year holiday. The company, once the dominant force in the global EV market, has seen its market share erode in key regions like Europe and China due to the rise of domestic competitors.

While Tesla faces competition in the United States from established automakers and emerging EV startups, Chinese automakers are currently barred from selling vehicles in the country due to trade restrictions and political tensions. The elimination of the $7,500 U.S. federal tax incentive for Tesla vehicles appears to have had a significant impact on sales in the fourth quarter, making Tesla's vehicles less price-competitive compared to those still eligible for the credit.

The company is expected to ramp up production of the Cybertruck and introduce new models in the coming years to regain market share and address the growing demand for electric vehicles. Tesla is also investing in battery technology and charging infrastructure to further enhance the appeal of its vehicles and maintain its position as a leading innovator in the EV industry.