Tesla’s fourth quarter sales fell a lot more than expected

Tesla’s sales fell in the fourth quarter of 2025, as growing competition and the expiration of the federal electric vehicle tax credit continued to undermine the company’s global ambitions. Declining sales led Tesla to lose its title as the world’s best-selling electric vehicle maker to China’s BYD, which sold 2.26 million vehicles last year.

The disappointing sales report raises questions about whether Tesla can reverse its downward trend and meet its goals for deploying self-driving cars and humanoid robots, both of which have supported the company’s valuation for many years.

Tesla said it delivered 418,227 vehicles in the fourth quarter, down 15.6% from the same three-month period in 2024. The delivery number fell short of the Wall Street consensus figure, which predicted Tesla would deliver 422,850 vehicles. The company also said it produced 434,358 vehicles in the fourth quarter of 2025, a year-on-year decline of 5.8%. For a direct-to-consumer company like Tesla, deliveries are a proxy for sales.

For the full year, Tesla sold 1,636,129 vehicles, the vast majority of which were Model 3s and Model Ys. This represents an 8.5% year-over-year sales decline and the second year in a row that Tesla has seen an annual sales decline. The company produced 1,654,667 vehicles in 2025, a year-over-year decrease of 6.7%.

There is also evidence that sales of the polarizing Tesla Cybertruck have completely stagnated. The company said it delivered just 11,642 “other” vehicles in the fourth quarter, a category that includes the Model S, Model X and Cybertruck. This represents a whopping 50.7 percent year-over-year decrease. (Tesla doesn’t give exact numbers for each model.)

The drop in sales was widely expected, given the crazy year Tesla has just had. Growing competition in the United States, Europe and China from traditional automakers offering new, cheaper electric vehicles has seriously dented demand for Tesla. And the emergence of Tesla CEO Elon Musk as a controversial political figure, pushing racist right-wing conspiracies on his social media platform

Musk himself said the company was going to have “a few tough quarters” due to expiring incentives and other macroeconomic factors. But he thinks Tesla will bounce back as its AI projects come to fruition, including robo-taxis and humanoid robots. Musk predicted that 50% of the US population will have access to Tesla’s robo-taxi by the end of 2025. So far, only a handful of vehicles are available in Austin and San Francisco for a limited number of customers.

The sales report follows Musk’s approval from Tesla shareholders for a massive new pay package that could make him the world’s first billionaire. Musk would have to take a series of ambitious steps to receive the compensation, including producing more than a million robots, a million robotaxis and creating $7.5 trillion in value for Tesla shareholders.

But those changes will likely happen years from now — if they happen at all — leaving Tesla struggling in the current environment with an aging lineup and degraded brand image. The company recently released cheaper versions of its best-selling Model 3 and Model Y, expected to usher in a new era of demand for Tesla. But so far, the newly affordable vehicles have yet to reverse the company’s downward trend.