China's BYD overtakes Tesla as world's top EV seller

China’s BYD has overtaken Tesla as the world’s top electric vehicle seller after a surge in 2025 sales, while Tesla’s deliveries fell for a second year. Tesla faced subsidy cuts, rising competition and investor concerns, though it remains more profitable. BYD’s growth, driven by low prices and overseas expansion, has been especially strong in the UK.

China’s BYD has emerged as the world’s largest seller of electric vehicles, overtaking Elon Musk’s Tesla for the first time on an annual basis and underscoring a shifting balance in the global EV market.

Tesla reported that its worldwide vehicle deliveries fell by almost 9% in 2025, reaching about 1.64 million units. The decline marked the company’s second straight year of shrinking sales volumes. By contrast, BYD announced a sharp increase in demand for its battery-powered cars, with annual sales climbing nearly 28% to more than 2.25 million vehicles.

The figures place Tesla behind its Chinese rival at a time when the US automaker has been navigating a challenging period. The past year has brought a lukewarm response to some new models, growing scrutiny of Musk’s political involvement, and intensifying competition from lower-cost Chinese manufacturers.

Tesla’s difficulties were particularly pronounced at the end of the year. Vehicle sales dropped 16% in the final quarter of 2025, a decline partly linked to the removal of a government incentive that had reduced the price of certain electric and hybrid vehicles by up to $7,500 (£5,570). The loss of the subsidy weighed on demand at a critical time.

Reflecting these pressures, several Wall Street analysts have revised down their forecasts for Tesla’s 2026 sales, pointing to a more cautious outlook for the company’s near-term growth. Meanwhile, Chinese automakers including BYD, Geely and MG have continued to challenge established Western brands by offering competitively priced vehicles.

Tesla has taken steps to defend its position. In October, the company introduced cheaper versions of its two best-selling models in the US, aiming to stimulate demand amid a crowded and price-sensitive market.

The sales slowdown comes as Musk faces ambitious targets tied to a landmark compensation agreement. The pay package, approved by shareholders in November, could be worth as much as $1tn (£740bn) if Tesla achieves major gains in sales and market value over the next decade. The deal also includes a requirement for Tesla to sell one million humanoid robots within ten years, building on heavy investment in its Optimus robot and autonomous “robotaxi” technology.

Industry analysts say Tesla’s planned rollout of robotaxis and expanded self-driving capabilities in 2026 will be critical to its future performance. Optimism around these projects has already helped push the company’s share price to record highs. Despite ongoing doubts about the feasibility and timing of full self-driving technology, some analysts remain bullish. Dan Ives of Wedbush Securities has argued that Tesla could control around 70% of the self-driving market over the next decade, citing the company’s scale and technological reach.

Beyond Tesla, Musk’s attention is divided among several high-profile ventures, including the social media platform X, space company SpaceX and tunnel-building firm the Boring Company. His brief role heading the US government’s Department of Government Efficiency (Doge) earlier last year also prompted concerns among investors that Tesla was not receiving sufficient focus. Musk has since withdrawn from that government position.

While BYD’s ascent has been rapid, its momentum showed signs of easing last year. The company’s sales growth in 2025 was its slowest in five years, partly due to intense competition within China, its largest market. Even so, although BYD has now surpassed Tesla in vehicle volumes, Tesla has continued to post stronger profitability in recent quarters.

BYD’s global influence remains significant, driven largely by aggressive pricing that often undercuts rivals. Headquartered in Shenzhen, the company has expanded quickly across Latin America, Southeast Asia and parts of Europe, despite facing high tariffs on Chinese-made EVs in several countries.

The UK has become a standout market for BYD. In October, the company said Britain was its largest overseas market, reporting an 880% surge in UK sales in the year to the end of September. The growth was fueled by strong demand for the plug-in hybrid version of its Seal U SUV, highlighting BYD’s growing appeal beyond its home market.