Elon Musk's Tesla is no longer the world's top seller of electric vehicles, as domestic demand has cooled while competition intensifies abroad.
Tesla lost its pole position after reporting 1.64 million deliveries in 2025, about 620,000 fewer than Chinese competitor BYD.
Tesla struggled last year amid increasing competition, waning federal support for electric vehicle adoption and brand damage from Musk's time in the White House.
Musk is focusing his attention on robotics and self-driving technology in an effort to keep Tesla relevant as its electric vehicles lose popularity.
On Friday, the company reported lower-than-expected delivery numbers for the fourth quarter of 2025, a decline from the previous quarter and a 16% year-over-year decline. Tesla delivered 418,227 vehicles in the fourth quarter and produced 434,358.
According to an analyst consensus compiled by the company and posted on Tesla's website in December, the company was projected to deliver nearly 423,000 vehicles in the fourth quarter.
Tesla's annual deliveries fell about 8% last year from 1.79 million in 2024. Its third-quarter deliveries saw a boost as consumers rushed to buy electric vehicles before a $7,500 tax credit expired at the end of September.
“There are many contributing factors, ranging from Musk's lack of evolution and true product innovation to the loss of EV credits,” said Karl Brauer, an analyst at iSeeCars.com. “Teslas are just starting to look old. You have a lot of other options, and they all look newer and fresher.”
BYD is making premium electric vehicles at an affordable price, Brauer said, but high tariffs on Chinese electric vehicles have effectively prevented the cars from gaining popularity in the US.
Other international automakers such as South Korea's Hyundai and Germany's Volkswagen have been expanding their electric vehicle offerings.
In the third quarter of last year, American automaker Ford sold a record number of electric vehicles, driven by its popular Mustang Mach-E SUV and its F-150 Lightning pickup truck.
In October, Tesla launched long-awaited lower-cost versions of its Model 3 and Model Y in a bid to attract new customers.
However, analysts and investors were disappointed by the launch, saying the models, which start at $36,990, are not affordable enough to attract a new group of consumers to consider the eco-friendly option.
As evidenced by Tesla's continued sales decline, the new Model 3 and Model Y have not been big wins for the company, Brauer said.
“There is a core of Tesla fans who will never choose anything else, but that's not how you grow,” Brauer said.
Tesla lost a large number of customers last year when Musk joined the Trump administration as head of the so-called Department of Government Efficiency.
Left-leaning Tesla owners, who were originally attracted to the brand for its environmental benefits, were alienated by Musk's political activity.
Consumers staged protests against the brand and some celebrities proposed selling their Teslas.
Although Musk left the White House, the company suffered significant and lasting damage to its reputation, experts said.
However, investors remain largely optimistic about Tesla's future.
Shares are up nearly 40% over the past six months and 16% over the past year.
Brauer said investors are clinging to the hope that Musk's robotaxi business will take off and that the ambitious CEO will succeed in developing humanoid robots and self-driving cars.
The launch of Tesla's robotaxis in Austin, Texas, last summer was plagued with technical glitches, and experts say Tesla has a long way to go to catch up with autonomous transportation company Waymo.
Still, the burgeoning robotaxi industry could be extremely lucrative for Tesla if Musk can deliver on his promises.
“Musk has done a good job, increasingly over the last year, of shifting the conversation from Tesla sales to artificial intelligence and robotics,” Brauer said. “I think the current share price largely reflects that.”
Shares fell about 2% on Friday after the company reported earnings.
