Tesla has officially ceded its long held crown as the world’s top electric vehicle maker, with China’s BYD now firmly in the lead after a year of surging sales in Asia and stalling demand for Elon Musk’s cars. The changing of the guard comes as Tesla reports its second straight annual drop in deliveries, underscoring how quickly the balance of power in the global EV race has tilted toward China. It also comes after the end of federal subsidies for EV purchases in the U.S. from Musk’s on-again, off-again ally President Donald Trump, a move that Ford CEO Jim Farley predicted in September would cut the EV market in half.

China’s BYD said this week it sold about 2.26 million fully electric vehicles in 2025, an increase of nearly 28% from the prior year and enough to make it the world’s largest EV seller. The Shenzhen based company’s battery electric tally does not include its vast plug in hybrid lineup, which brings total “new energy vehicle” sales to roughly 4.6 million last year.

By contrast, Tesla reported that its 2025 deliveries fell to roughly 1.6 million vehicles, down about 8%–9% from 2024 and well below BYD’s all electric total. That marks the second year in a row of shrinking sales for Tesla, which peaked around 1.8 million deliveries in 2023, but it was still narrowly ahead of BYD in 2024.

In an unusual move, Tesla preemptively released a statement on Tuesday, detailing the estimates from 20 Wall Street analysts on its deliveries through 2029 while adding that it “does not endorse” any of that information. The Information‘s Martin Peers suggested that Tesla didn’t want anyone “to be shocked by the magnitude of the sales decline it’s on track to report for the fourth quarter of 2025.” Peers noted that analysts expected a 14.6% drop to 422,850 and, in fact, Tesla reported a 15% drop to 418,227. Analyst Gary Black was on the mark in a post on X, interpreting the Tesla statement as a sign that it would release a number closer to the 420,000 range than previous estimates of around 450,000. Tesla stock is down over 6% over the last five days, but was relatively unchanged on Friday, indicating that the market had already priced in this news.

Ford Motor Company, for its part, announced a $19.5 billion writedown on its EV initiatives in December, with Farley saying there was a “customer-driven shift.” Speaking to CNBC about the electric pivot, Farley said that just in line with his predictions, the EV market had already shrunk to around 5% of the U.S. vehicle market, cut in half since the subsidy ended in September.

Tesla’s rare reversal in growth

For more than a decade, Tesla was synonymous with relentless growth, riding early mover advantage and generous subsidies to become the face of the EV revolution. That trajectory reversed in 2024 and 2025 as global demand cooled, rivals undercut prices, and key incentives in the United States and Europe expired. Elon Musk’s political evolution likely played a role as well, with his hard-right turn clashing with the demographics of many Tesla owners, who tend to be affluent and left-leaning. Sales in Europe notably declined as Musk took steps to endorse, for instance, the far-right AFD in Germany and Marine Le Pen in France.

BYD’s ascent has been built on aggressive pricing, dense local supply chains and a broad range of mass market models that target price sensitive buyers at home and abroad. The company now sells everything from budget city cars to premium sedans, and it has rapidly expanded exports to Europe, Southeast Asia, Latin America and the Middle East. BYD sales are effectively not allowed at all in the U.S., with 100% high tariffs in place for Chinese EVs since 2024, enacted under President Joe Biden.

Crucially, BYD caught and then overtook Tesla in pure EV production in 2024, before converting that lead into a clear sales advantage last year as its volumes passed 2.2 million fully electric units. Analysts say the company’s scale in China—by far the world’s largest EV market—gives it cost and learning curve advantages that are increasingly hard for Western rivals to match.

The shift in rankings lands at a politically sensitive moment, with Washington and Brussels already scrutinizing Chinese EV imports and raising tariffs over concerns about overcapacity and state support. Any further clampdown could complicate BYD’s overseas push even as it entrenches dominance inside China, where competition remains fierce and local subsidies are being pared back.