Washington, United States: Tesla on Friday reported weaker-than-expected sales for the fourth quarter of 2025, losing its crown as the world’s largest electric vehicle maker by annual sales to China’s BYD.

The Elon Musk-led company delivered 418,227 vehicles in the final three months of the year, taking its total EV sales for 2025 to about 1.64 million units. A day earlier, Chinese auto major BYD announced it had sold 2.26 million electric vehicles last year.

Tesla had reported sales of 1.22 million vehicles by the end of September, bolstered by a one-time surge ahead of the expiry of a key US tax incentive.

That spike was driven by buyers rushing to take advantage of a $7,500 federal tax credit for electric vehicles, which ended in September 2025 under legislation backed by US President Donald Trump, a known climate change skeptic.

However, Tesla’s momentum appears to be slowing. According to a FactSet consensus, the company’s deliveries in the next quarter are expected to slip to around 449,000 vehicles, bringing full-year sales to roughly 1.65 million — a decline of 7.7 per cent and significantly below BYD’s tally by the end of November.

Deutsche Bank painted a more pessimistic picture, projecting just 405,000 Tesla EV deliveries in the fourth quarter. The bank expects sales to fall by nearly one-third in both North America and Europe, and by about 10 per cent in China.

Industry analysts say the US electric vehicle market is still adjusting to the removal of the federal tax credit, with demand expected to take time to stabilise.

Tesla’s challenges had emerged even before the incentive ended, with sales coming under pressure in key markets amid growing competition from BYD and other Chinese manufacturers, as well as established European automakers. The company has also faced consumer backlash linked to Musk’s public political support for Trump and other far-right leaders.

“We believe Tesla will see some weakness on deliveries” in the fourth quarter, said Dan Ives of Wedbush Securities.

Sales of around 420,000 vehicles would be “good enough to show stable demand,” with Wall Street now “laser focused on the autonomous chapter kicking off in 2026,” Ives added, referring to Tesla’s plans for self-driving vehicles.