Tesla’s global electric vehicle sales fell sharply in 2025, signaling growing pressure on the world’s most recognised EV brand. The company delivered 1.63 million vehicles worldwide during the year. This figure represents a 9% drop from the 1.79 million units sold in 2024. As a result, Tesla recorded its second consecutive annual sales decline, raising concerns among investors and industry watchers. Although electric vehicles continue expanding globally, Tesla’s growth momentum clearly slowed during 2025.
Fourth-Quarter Numbers Deepen Investor Concerns
The slowdown became more pronounced in the final quarter of the year. Tesla delivered 418,227 vehicles in the fourth quarter. This marked a steep 15.6% decline compared to the same period last year. Moreover, the result fell well below analyst expectations. Consequently, Tesla’s share price dropped by more than 2% when trading resumed after the New Year break. Market sentiment weakened as investors reassessed Tesla’s near-term outlook.
Policy Changes Hit US Demand
One major factor behind the decline was the removal of the federal EV tax credit in the United States. The $7,500 incentive had supported Tesla’s demand for several years. However, its discontinuation directly affected consumer purchasing decisions. In fact, Tesla recorded record sales of 497,099 vehicles in the third quarter of 2025. Buyers rushed to secure vehicles before the incentive expired. As a result, fourth-quarter demand dropped sharply once the credit ended.
Competition Intensifies in Global EV Markets
Rising competition also weighed heavily on Tesla’s performance. Chinese automakers continued expanding aggressively across global markets. BYD delivered 2.26 million electric vehicles in 2025. This allowed BYD to overtake Tesla as the world’s largest EV seller. Meanwhile, Tesla’s market share eroded in both Europe and China. Although Chinese brands remain barred from the US market, their dominance elsewhere reshaped global rankings.
Product Mix Shows Mixed Signals
Tesla’s reported sales include approximately 50,850 vehicles listed as “other models.” This category covers the Cybertruck alongside the Model S and Model X. While the Cybertruck attracted strong initial interest, volumes remained limited during the year. T mmmmherefore, it could not offset broader declines across Tesla’s mainstream lineup. This imbalance highlighted challenges in scaling newer models quickly.
Revenue Still Anchored in EV Business
Despite lower deliveries, Tesla’s electric vehicle division remained its primary revenue driver. During the third quarter, the company generated $28 billion in total revenue. Of this amount, $21.2 billion came directly from EV sales. This performance underscored Tesla’s continued financial reliance on vehicle deliveries. However, slower unit growth could pressure margins in future quarters.
Strategic Questions Loom for 2026
Tesla’s 2025 results reflect a turning point for the global EV industry. Policy shifts, intensifying competition, and changing consumer incentives reshaped demand patterns. While Tesla retains strong brand recognition, its dominance is no longer guaranteed. As 2026 unfolds, investors will closely watch how the company adapts its pricing, product strategy, and global positioning. Ultimately, Tesla’s response to these challenges will determine whether it can reclaim growth momentum in an increasingly crowded electric vehicle market.
