Elon Musk’s Tesla has suffered its biggest-ever drop in annual sales, leading it to be overtaken as the world’s biggest seller of electric cars.
Tesla sold 418,227 cars in the final three months of 2025, new figures revealed on Friday, a 15.6pc drop on the same quarter a year earlier.
It means that the company’s annual sales fell by 8.6pc in 2025, marking a second consecutive yearly slump after a 1pc decline in 2024.
Its recent dip has led to China’s BYD overtaking Tesla as the world’s biggest EV seller on an annual basis.
BYD, which has pushed heavily into Europe and the UK, sold 2.3 million fully electric cars last year compared to Tesla’s 1.6 million.
It comes after Mr Musk faced a political backlash over his support for Donald Trump, his work on the White House’s cost-cutting “Doge” project and his embrace of far-Right movements like Germany’s AfD and Tommy Robinson’s Advance UK.
Sales have also been hit by the removal of Joe Biden’s subsidies for US electric car purchases in recent months, and a new “luxury vehicle tax” in the UK on EVs costing more than £40,000.
Mr Musk has also sought to shift away from EV sales as the biggest mark of Tesla’s success.
He has increasingly focused on the company’s self-driving software, unveiling a “Cybercab” with no steering wheel or pedals, and launching a robotaxi business in Texas and California.
He has also made grand promises about the company’s Optimus robotics technology, saying that sales could surpass those of cars and that Optimus robots could outnumber humans.
In November, shareholders approved a pay package for Mr Musk that could see him become the world’s first trillionaire if he sells one million robots and has one million self-driving taxis on the road.
Mr Musk would also have to multiply Tesla’s share price to give it a valuation of $8.5tn (£6.4tn). The promises have led Tesla’s shares to climb to an all-time high in recent months, making the company worth $1.4tn.
Tesla’s car sales have also suffered from waning enthusiasm for EVs and growing competition from China, including BYD.
The company, whose name stands for “Build Your Dreams”, has been the biggest EV seller in China for several years but has advanced across the rest of the world since 2024, including in the UK.
BYD sold 43,740 cars in the first 11 months of 2025 in Britain, almost six times what it sold 12 months earlier, and more than Tesla’s total UK sales, which fell slightly to 39,227 in the same period.
However, BYD has faced its own pressures. Warren Buffett’s Berkshire Hathaway, which was an early backer of the company, finished selling its stake last year, and BYD’s own growth has slowed amid cut-throat competition.