Tesla loses EV crown to rivals; tax credit expiry hits demand

Tesla's quarter deliveries fall more than expected on lower demand

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TESLA ceded its crown as the world's top electric vehicle (EV) maker to China's BYD, after annual sales fell for a second year, hit by rising competition, the expiry of US tax credits and brand backlash.

With global EV sales rising 28% last year, BYD outsold Tesla for the first time on an annual basis, helped by rapid growth in Europe, where the Chinese automaker has been widening its lead over the US rival.

Tesla, whose sales fell about 8.6% in 2025, is facing intense competition, especially in Europe, raising questions about its ability to revive the core auto business as Chief Executive Officer Elon Musk steers the company towards robotaxis and humanoid robots.

Shares of the company fell about 2% in afternoon trading.

"Investors are so focused on the future with Tesla that they are ignoring delivery numbers. It's about Optimus, Robotaxi and physical AI (artificial intelligence)," said Dennis Dick, a trader at Triple D Trading, which owns Tesla shares.

END OF TAX CREDIT IN US PINCHES TESLA

Tesla's fourth-quarter figures come after third-quarter deliveries were supported by a rush to lock in $7,500 in federal tax credits after President Donald J. Trump's administration decided to pull the plug on the incentive in September.

In the US, EVs accounted for 6.2% of retail vehicle sales in the quarter, down 3.6 percentage points from a year earlier, while average transaction prices rose nearly $6,000 to $53,300, according to JD Power data.

Tesla said it delivered 418,227 vehicles in the October-December quarter, down 15.6% from 495,570 a year earlier. Analysts