China’s BYD Surpasses Tesla as World Leader in Electric Car Sales

 

China’s BYD Surpasses Tesla as World Leader in Electric Car Sales

 

As the largest maker of electric vehicles in the United States, Tesla suffered more than other carmakers from the elimination of federal incentives.

 

Jack Ewing

By Jack Ewing

Jan. 2, 2026

Updated 2:47 p.m. ET

https://www.nytimes.com/2026/01/02/business/tesla-electric-vehicles-fourth-quarter-sales.html

 

Tesla has lost its status as the world’s biggest seller of electric vehicles after Congress and President Trump eliminated the federal tax credits that had encouraged Americans to buy those cars.

 

The company’s car sales declined 16 percent in the last three months of 2025, Tesla said on Friday. And its sales for the full year declined 9 percent even as other automakers notched gains. In 2025, for the first year ever, the company sold fewer electric cars than China’s leading automaker, BYD.

 

The sales figures released on Friday highlighted how far Tesla has turned away from its onetime goal of becoming the largest carmaker in the world. It once set a target of selling 20 million cars a year by 2030 — or about twice as much as what Toyota does now. Elon Musk, Tesla’s chief executive, has instead bet the company’s future on self-driving cars and humanoid robots, developing technologies that do not yet generate much revenue and where there is significant competition.

 

Tesla remains the largest American maker of electric vehicles, but its slumping sales suggest that a wider slowdown is in store in the United States for a technology seen as an important tool against climate change and urban air pollution.

 

Last year, Mr. Trump and Republicans in Congress eliminated tax credits of up to $7,500 for people who bought or leased electric vehicles. And the Trump administration began an effort last month to gut clean air regulations that have pushed automakers to produce more battery-powered models.

 

The 180-degree shift in federal policy has had a particularly strong impact on Tesla, which accounts for 45 percent of the U.S. electric vehicle market and has been the biggest beneficiary of federal policies supporting those cars.

 

Mr. Musk was one of Mr. Trump’s biggest supporters during the 2024 presidential election, but that did not restrain Republicans from favoring the fossil fuel industry after they regained control of Congress and the White House.

 

The carmaker said Friday that it had delivered 1.64 million cars worldwide during 2025, down from almost 1.8 million in 2024. Deliveries in the fourth quarter, which were hit the hardest by the tax credit elimination at the end of September, fell to 418,000 from 496,000 a year earlier.

 

On Thursday, BYD said it sold 2.26 million electric cars globally last year, up 28 percent from 2024. A growing proportion of those sales took place outside China, primarily in Asia, Europe and Latin America. Chinese electric cars are effectively banned from the United States by high tariffs.

 

Industry analysts expect U.S. electric vehicle sales for all manufacturers to be tepid in 2026. But they also expect sales to pick up again in 2027 when automakers begin offering more electric vehicles for $30,000 or less, including a midsize Ford pickup. Many electric vehicles available now are much more expensive than similar gasoline models.

 

“Once those come to market, I think you’ll see the market start to grow,” said Kevin Roberts, director of economic and market intelligence at CarGurus, an online car shopping site. But he added that “2026 could be a tough year.”

 

Part of Tesla’s decline in the fourth quarter reflected a rush by American electric car buyers in the previous quarter to take advantage of the tax credit before it expired. Sales of all electric vehicle brands in November, the second month without incentives, plunged more than 40 percent from a year earlier, according to Cox Automotive.

 

The demise of incentives has already prompted carmakers to cut prices, expanding the number electric vehicles that are sold for less than $40,000. Examples include the Chevrolet Equinox EV, the Hyundai Ioniq 5 and the Nissan Leaf.

 

In October, Tesla began selling a stripped-down version of its Model 3 sedan for $37,000. The car uses cheaper interior materials, lacks an FM radio and cannot travel as far on a charge as versions selling for $42,500 or more.

 

Prices of electric vehicles are expected to fall more over time, eventually becoming less expensive than comparable gasoline models. Batteries are becoming cheaper while offering faster charging times and greater driving range.

 

“The economics will eventually be there with battery prices going down,” said Stephanie Valdez Streaty, director of industry insights at Cox Automotive.

 

Ms. Valdez Streaty, who specializes in electric vehicles, expects them to account for 8.5 percent of the U.S. new car market in 2026, rebounding from 5.4 percent in November. She expects their market share to reach 17 percent or more by 2030.

 

Growth will be fastest in states that offer residents incentives to buy battery-powered vehicles, like California, Colorado and New York. And the charging network will expand despite lackluster federal support, Ms. Valdez Streaty said, with more chargers added to apartment complexes and workplaces, making it easier for renters and other people who cannot charge vehicles at home.

 

Sales of hybrid vehicles continue to grow strongly, a sign that buyers are interested in electric transportation but worried about charging. Hybrids have internal combustion engines and electric motors and can travel short distances on battery power. They are typically less expensive than new E.V.s and only modestly more expensive than cars that run solely on fossil fuels.

 

There is also strong demand for used electric vehicles, which are often as affordable as comparable gasoline cars.

 

The decline in Tesla sales is not just the result of shifting U.S. policy. The company’s car sales peaked in 2023, when it delivered 1.8 million vehicles, even though total sales of electric vehicles have grown rapidly over the past two years in most countries, especially in Asia and Europe.

 

In addition to BYD and other Chinese automakers, Tesla is losing ground to established automakers. In Europe, Tesla now sells fewer electric cars than Volkswagen.

 

Tesla vehicles also appear increasingly dated. The company has not made substantial updates to its best-selling model, the Model Y sport utility vehicle, which first went on sale in 2020. The only new model that Tesla has introduced since then is the Cybertruck, which has sold poorly.

 

“Since they haven’t had any new products, their share has dwindled,” Ms. Valdez Streaty said.

 

Tesla’s sales have also been hurt by Mr. Musk’s public support for right-wing causes. He has been less strident recently, and he spends less time in Washington than he did in the early months of the second Trump administration. But Mr. Musk continues to put off many liberals, the biggest buyers of electric vehicles, particularly in Germany and France, where Tesla sales plummeted after he endorsed far-right politicians.

 

In 2026 Tesla could benefit from less competition as General Motors, Ford Motor and other automakers slow rollouts of new electric models, said Tom Narayan, an analyst at RBC Capital Markets in London. In a note to clients Friday, he pointed out that BYD and other Chinese automakers will also receive less help from their government.

 

“Government initiatives to end the price war and help domestic suppliers could help Tesla,” Mr. Narayan said.

 

Wall Street has largely shrugged off Tesla’s flagging car sales. The company’s stock has been trading near record levels because investors believe that Tesla will dominate the emerging market for self-driving taxis. Tesla’s Robotaxi service operates in Austin, Texas, and San Francisco, but the cars have human monitors inside who can intervene if there are problems.

 

Mr. Musk had said Tesla taxis would operate in Austin without human monitors by the end of 2025, but appeared to have missed that target.

 

Waymo, a division of Alphabet, Google’s parent company, has about 2,500 autonomous taxis without human monitors in Austin, San Francisco and three other cities. It plans to expand to 20 more in 2026.

 

Jack Ewing covers the auto industry for The Times, with an emphasis on electric vehicles.