Tesla’s annual sales have declined for the second consecutive year. This drop is driven by the removal of the federal tax credit in the United States and increasing competition from Chinese automakers.
The company delivered 1.63 million vehicles globally in 2025, a 9% decrease from the 1.79 million delivered in 2024. Within that total, approximately 50,850 vehicles were classified as “other models,” a category that includes the Cybertruck along with the older Model S and Model X.
Tesla’s fourth-quarter sales were 418,227 vehicles, representing a 15.6% drop from the same period last year. This decline was significantly larger than analysts had anticipated. Following the news, Tesla’s stock fell more than 2% as the market opened after the New Year holiday.
Once the global leader in electric vehicle sales, Tesla has seen its market share erode in both Europe and China due to the rise of Chinese competitors. China’s BYD, which delivered 2.26 million electric vehicles in 2025, has now taken the top spot for global EV sales. Tesla is also facing heightened competition in the United States, though notably not from Chinese automakers, which are barred from selling vehicles in the country.
The elimination of the $7,500 U.S. federal tax incentive appears to have delivered the biggest blow in the fourth quarter. Tesla sold a record-breaking 497,099 vehicles in the third quarter, a 29% increase from the previous quarter, as consumers rushed to buy EVs before the credit expired. Sales have retreated since then, despite the company’s efforts to attract buyers.
This sales decline comes as CEO Elon Musk attempts to pivot the company away from the business of making and selling electric vehicles and toward artificial intelligence and robotics. Musk’s vision focuses on “sustainable abundance,” an ecosystem of sustainable products spanning transport, energy generation, battery storage, and robotics.
However, the bulk of Tesla’s income still comes from its electric vehicle business. For instance, in the third quarter, Tesla generated $28 billion in total revenue, with $21.2 billion of that coming from vehicle sales.