Tesla’s annual sales have declined for the second consecutive year, primarily due to the removal of the federal tax credit in the U.S. and increasing competition from Chinese automakers.
In 2025, Tesla delivered 1.63 million vehicles globally, marking a 9% decrease from 1.79 million in 2024, based on company data. This total includes about 50,850 vehicles categorized as “other models,” which encompasses the Cybertruck and older Model X and Model S vehicles.
During the fourth quarter, Tesla reported sales of 418,227 vehicles, a 15.6% drop from the same period last year, significantly exceeding analysts’ expectations. Consequently, Tesla’s stock fell more than 2% when the market opened after the New Year holiday.
Once leading global EV sales, Tesla has lost market share in both Europe and China due to the rise of competitors like China’s BYD, which sold 2.26 million EVs in 2025 and claimed the top global sales position. In the U.S., Tesla faces more competition, though notably, it’s not from Chinese automakers, as they are prohibited from selling vehicles in the country.
The most significant impact seems to stem from the ending of the $7,500 U.S. federal tax incentive. In the third quarter, Tesla sold a record 497,099 vehicles—a 29% increase from the previous quarter—as consumers hurried to purchase EVs before the tax credit disappeared. Since then, however, sales have slumped, despite efforts to attract buyers.
These declining sales come as CEO Elon Musk aims to shift the company’s focus from merely manufacturing and selling EVs to sectors like AI and robotics. Musk believes there is potential for profit in what he calls “sustainable abundance,” a term featured in the company’s recent Master Plan IV that outlines an ecosystem of sustainable products, ranging from transportation to energy generation, battery storage, and robotics.
Nevertheless, the majority of Tesla’s income still stems from its EV business. For instance, in the third quarter, Tesla reported $28 billion in revenue, with $21.2 billion generated from EV sales.
