The Chinese automaker has sold 2.26 million battery-electric vehicles in 2025, crushing Tesla’s 1.64 million deliveries and ending the American company’s reign at the top.
BYD sold over 1 million vehicles overseas in 2025, a 150% jump from 2024. The company now operates 1,000 sales points across European markets and plans to double that number in 2026. The company is building factories in Hungary, Brazil, and potentially Spain to avoid tariffs and serve local customers faster.
Tesla, meanwhile, struggles to maintain its grip on markets it once dominated. Fourth-quarter deliveries fell 16% year-over-year to just 418,227 vehicles, missing Wall Street’s already reduced expectations of 440,000 units. CNBC confirms these numbers show deeper problems than just seasonal fluctuations.
Tesla Sales Decline From Multiple Pressures
Three main factors hurt Tesla’s performance in 2025.
First, increased competition squeezed Tesla’s market position. Chinese manufacturers like BYD, Geely, and others offer cheaper electric vehicles with competitive features. Buyers now have many options beyond Tesla.
Second, the Trump administration phased out the $7,500 federal tax credit for electric vehicles in September 2025. This directly impacted affordability for American buyers. AP News reports sales fell hard after the credit expired.
Third, customer pushback against Musk’s politics damaged the brand. Multiple studies show Musk’s right-wing political activities alienated environmentally-minded Democratic buyers who historically formed Tesla’s strongest customer base. One research paper found that these partisan activities cost Tesla over 1 million potential sales without attracting equivalent Republican buyers to offset the losses.
European customers showed particularly strong resistance. Despite President Trump calling Musk a “patriot” and praising Tesla at a White House press conference in early 2025, sales continued sliding.
Elon Musk Bets Tesla’s Future on Robotaxis and Robots
Musk claims Tesla will start mass production of three new products in 2026: the electric Semi truck, the self-driving Cybercab robotaxi, and the Optimus humanoid robot.
Production should begin in the second quarter of 2026. The vehicle has no steering wheel or pedals, relying entirely on autonomous driving technology. Tesla started testing robotaxi services in Austin, Texas, in June 2025, first with safety drivers, then without any human backup.
However, regulatory approval remains uncertain. California authorities ruled that Tesla misled customers about vehicle safety, putting the company’s license to sell cars in the state at risk. Federal safety investigations into Tesla’s Full Self-Driving software continue.
Investors appear willing to overlook declining car sales. Tesla stock rose 11% in 2025, reaching an all-time high of $489.88 in December. Shareholders approved a new pay package for Musk at the November annual meeting that could make him the world’s first trillionaire. The Delaware Supreme Court also reversed a decision blocking Musk’s $55 billion 2018 pay package, adding to his wealth.
Wedbush Securities analyst Dan Ives expects Tesla’s autonomous offerings will overcome current setbacks, though he acknowledges that regulation “is going to be a big issue” when dealing with people’s lives.
Why BYD Overtakes Tesla Matters for the EV Market
BYD’s rise proves that established automotive experience matters. The company builds cars at price points that average buyers can afford. Its Seagull model costs significantly less than Tesla’s cheapest option, making electric vehicles accessible to more people globally.
Tesla responded by launching stripped-down versions of the Model Y and Model 3 in October 2025. The basic Model Y costs just under $40,000, while the entry Model 3 sells for under $37,000. These cheaper versions aim to compete with Chinese models in Europe and Asia.
But price cuts alone may not solve Tesla’s problems. The company faces simultaneous challenges in manufacturing, regulation, brand perception, and market competition. Each issue requires different solutions.
BYD overtakes Tesla at a moment when both companies face pressure. While BYD grew strongly in 2025, that 28% increase represents its slowest growth in five years. Domestic Chinese competition from companies such as Geely, Nio, and Xpeng is intensifying. BYD’s market share in China dropped from 35% in 2023 to 29% in the first 11 months of 2025, according to the China Passenger Car Association, as reported by CNN.
Global EV sales rose about 28% overall in 2025. Tesla’s 9% decline means the company is losing market share, not just facing industry headwinds. Other manufacturers capture the customers Tesla cannot reach.
The question now is whether Tesla can reverse this trend in 2026. Analysts expect sales and profits to eventually rebound as the year progresses. But with BYD planning to double its European presence and maintain aggressive pricing, Tesla faces a tough fight to reclaim its position.
For buyers, more competition means better options and lower prices. The battle between BYD and Tesla benefits consumers who gain access to improved technology at more affordable rates.
The electric vehicle market is no longer Tesla’s playground. Multiple strong competitors fight for every customer. BYD overtakes Tesla because it executed better on pricing, production, and global expansion. That’s the new reality of the EV industry in 2026.
