Tesla’s annual sales have fallen for the second year in a row, with the decline exacerbated by the elimination of U.S. federal tax credits and competition from Chinese automakers.
Tesla will deliver 1.63 million vehicles globally in 2025, down 9% from 1.79 million in 2024, according to figures released by the company. Notably, approximately 50,850 of these vehicles are considered “other models,” a collection that includes the Cybertruck and its older Model X and Model S.
Tesla reported sales of 418,227 vehicles in the fourth quarter, down 15.6% from a year earlier and far exceeding analysts’ expectations. Tesla shares fell more than 2% when the market opened after the New Year’s holiday.
Tesla was once the global EV sales leader, but the rise of Chinese competitors has eroded its market share in Europe and China. China’s BYD will deliver 2.26 million EVs in 2025 and currently holds the top spot in global EV sales. Tesla faces additional competition in the U.S., most notably from Chinese automakers, which are banned from selling vehicles in the country.
But perhaps the biggest blow in the fourth quarter was the elimination of the $7,500 U.S. federal tax benefit. Tesla sold a record 497,099 vehicles in the third quarter, up 29% from the previous quarter, as consumers raced to buy EVs before the federal EV tax credit runs out. Sales have since regressed, despite efforts to persuade buyers.
Tesla’s sales decline comes as CEO Elon Musk is pivoting the company away from EV manufacturing and sales toward AI and robotics. Mr. Musk’s pitch is that you can make money with “sustainable wealth.” This is the tagline used throughout the company’s recent Master Plan IV, which describes an ecosystem of sustainable products, from transportation to energy generation, battery storage and robotics.
Still, the bulk of Tesla’s revenue comes from its EV business. For example, Tesla made $28 billion in revenue in the third quarter, $21.2 billion of which came from EV sales.
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