3 hours agoFri 2 Jan 2026 at 8:55pm

Elon Musk's company Tesla is no longer the world's biggest electric vehicle maker.  (Reuters: Gonzalo Fuentes)

In short:

Tesla has lost its title of the bestselling electric vehicle company to Chinese rival BYD.

Expiring US tax credits, stiff overseas competition and a customer revolt against chief executive Elon Musk are said to have contributed to sales dropping.

What's next?

Tesla stocks finished 2025 with an overall gain as investors look to Mr Musk's ambitions around Robotaxi services.

Tesla has lost its title as the world's bestselling electric vehicle maker as a customer revolt over chief executive Elon Musk's right-wing politics, expiring US tax breaks for buyers and stiff overseas competition pushed sales down for a second year in a row.

Tesla said that it delivered 1.64 million vehicles in 2025, down 9 per cent from a year earlier.

It makes Chinese rival BYD, which sold 2.26 million vehicles last year, the new biggest EV maker.

Tesla sales were hit hard by the expiration of a $US7,500 ($11,200) tax credit for electric vehicle purchases that was phased out by the Trump administration at the end of September.

The latest quarter was the first with sales of stripped-down versions of the Model Y and Model 3 that Mr Musk unveiled in early October as part of an effort to revive sales.

The new Model Y costs just under $US40,000, while customers can buy the cheaper Model 3 for under $US37,000. Those versions are expected to help Tesla compete with Chinese models in Europe and Asia.

Robotaxis boost investors' confidence

Tesla stock was down nearly 3 per cent at $US436.85 in afternoon trading on Friday, local time.

However, the stock finished 2025 with an overall gain of about 11 per cent as investors bet that Mr Musk can deliver on his ambitions to make Tesla a leader in robotaxi services.

Tesla started rolling out its robotaxi service in Austin earlier this year, first with safety monitors in the cars to take over in case of trouble, then testing without them. The company has said it hoped to roll out the service in several cities this year.

Wedbush Securities analyst Dan Ives said it would face a lot of regulatory challenges in doing this.

"We're dealing with people's lives," he said.

Tesla is under several federal safety investigations and other probes.

Tesla is the subject of a number of safety investigations.  (Getty Images: Smith Collection/Gado)

In California, Tesla is at risk of temporarily losing its license to sell cars in the state after a judge there ruled it had misled customers about their safety.

Mr Musk has said he hopes software updates to his cars will enable hundreds of thousands of Tesla vehicles to operate autonomously with zero human intervention by the end of this year. The company is also planning to begin production of its AI-powered Cybercab with no steering wheel or pedals in 2026.

To keep Mr Musk focused on the company, Tesla's directors awarded him a potentially enormous new pay package that shareholders backed at the annual meeting in November.

Mr Musk could become the world's first trillionaire later this year when he sells shares of his rocket company, SpaceX, to the public for the first time.

AP