China’s BYD has officially overtaken Tesla to become the world’s largest electric vehicle manufacturer, marking a major shift in the global EV landscape.
In 2025, BYD sold more than 2.26 million electric vehicles, while Tesla delivered 1.64 million units, recording a 9% year-on-year decline and its second consecutive annual drop in sales. The result pushed BYD into the global top position, reflecting the growing influence of Chinese automakers in overseas markets.
Tesla’s slowdown was driven by several converging factors. Competition from Chinese brands intensified across Europe and Asia, while demand in the United States weakened after the $7,500 federal EV tax credit expired in September 2025. In the final quarter of the year, Tesla delivered 418,227 vehicles, falling short of analysts’ expectations of around 440,000 units. Political controversy surrounding CEO Elon Musk also weighed on consumer sentiment during the year.
Despite weaker vehicle sales, Tesla’s stock price still rose about 11% in 2025, as investors focused on longer-term ambitions. These include robotaxi development, humanoid robotics, and the rollout of lower-cost versions of the Model 3 and Model Y to compete more aggressively with Chinese rivals. Prices for the Model Y have fallen to just under $40,000, and the Model 3 to under $37,000 in some markets.
Analysts remain cautious in the short term, forecasting a 3% further sales decline and nearly 40% drop in earnings per share for Tesla’s fourth quarter. However, many expect sales and profits to begin recovering in late 2026, provided price cuts and new technologies translate into renewed demand. Meanwhile, Musk’s personal wealth grew after shareholders approved an ambitious performance-based pay package and a US court reinstated a previously awarded compensation deal.
BYD’s rise underscores a broader transformation in the EV sector — one where scale, pricing power, and supply-chain dominance are allowing Chinese automakers to challenge Silicon Valley-led electric mobility on a global stage.
Source: Sky News (January 3, 2026)
Author: Saikat Bhattacharya
