BYD experienced a significant slowdown in sales growth in 2025, marking its weakest performance in five years. The Chinese electric vehicle (EV) giant's sales increased by 7.7% to 4.6 million vehicles, a deceleration attributed to intensifying domestic competition within China's increasingly saturated car market.

Despite the slower growth, BYD is poised to surpass Tesla in annual battery electric vehicle (BEV) sales for the first time. The company sold 2.3 million BEVs in 2025, representing a 27.9% increase year-over-year. This contrasts with analyst estimates projecting Tesla's 2025 BEV sales at 1.6 million units. However, BYD's December sales figures revealed a concerning trend, with monthly sales dropping 18.3% year-on-year to approximately 420,000 cars, according to a January 1st exchange filing.

The broader Chinese EV market is becoming increasingly competitive, impacting BYD's growth trajectory. Tesla's sales have also faced headwinds, potentially influenced by consumer sentiment regarding CEO Elon Musk's engagement in U.S. politics. Furthermore, the rollback of electric car subsidies by the Trump administration in the U.S. is expected to further dampen Tesla's sales.

BYD's rise reflects China's growing dominance in the global EV market. The company has strategically focused on both BEVs and plug-in hybrid electric vehicles (PHEVs), catering to a wider range of consumer preferences. This approach, combined with government support for the EV sector, has propelled BYD to the forefront of the industry.

Looking ahead, analysts predict Tesla's sales to reach 1.8 million cars in 2026, 2 million in 2027, and 3 million in 2029. However, these projections fall short of Musk's earlier claim of achieving 4 million annual sales by 2027. The evolving dynamics of the EV market, including intensifying competition and shifting consumer preferences, will likely determine the future market leadership between BYD and Tesla.