Introduction to Tesla’s Decline
Tesla has lost its position as the world’s best-selling electric vehicle manufacturer. The company faced a challenging year, marked by unrest surrounding CEO Elon Musk’s political activities and strong competition abroad, leading to a decline in sales for the second consecutive year.
Sales Performance
Tesla delivered 1.64 million vehicles in 2025, a 9% decrease from the previous year. In contrast, Chinese rival BYD sold 2.26 million vehicles, becoming the largest maker of electric vehicles. Tesla’s sales from October to December totaled 418,227, falling short of the 440,000 expected by analysts.
Factors Affecting Sales
The end of a $7,500 tax credit at the end of September may have contributed to the decline in sales. Despite this, Tesla shares ended 2025 up about 11%, with investors hoping for the company’s future ambitions, including leading in robotaxi services and introducing humanoid robots for homes and offices.
Market Reaction
Shares of Tesla rose nearly 2% before the opening bell on Friday, with shares largely unchanged at $450.27 in early trading. The latest quarter saw the introduction of stripped-down versions of the Model Y and Model 3, priced at under $40,000 and $37,000, respectively, to compete with Chinese models in Europe and Asia.
Future Expectations
Analysts expect a 3% decline in sales and a nearly 40% decline in earnings per share in the fourth-quarter results. However, they anticipate the downward trend to reverse in 2026. Musk’s ambitious performance targets, including a potential $1 trillion net salary, are expected to drive the company’s future growth.
Recent Developments
Musk won a shareholder vote for a $1 trillion pay package, contingent on meeting performance targets over the next decade. Additionally, the Delaware Supreme Court overturned a decision that stripped him of a $55 billion pay package from 2018, resulting in another significant windfall for the CEO.
