Chinese automaker BYD is set to surpass Tesla as the world’s largest electric vehicle company in annual sales. With the two companies expected to release their final figures for 2025 soon, BYD’s sales data indicates it has already sold 2.07 million electric vehicles by the end of November. In contrast, Tesla had sold 1.22 million vehicles by the end of September, with its sales expected to fall to 449,000 in the coming quarter, resulting in approximately 1.65 million sales for the year.
This decline in sales for Tesla can be attributed to the expiration of a US tax credit for electric vehicle buyers, which ended in September 2025. The company’s sales were boosted in the preceding quarter due to a rush to purchase vehicles before the tax credit expired, but this surge is not expected to be sustained. Deutsche Bank projects that Tesla’s sales will drop by around one-third in North America and Europe, and by one-tenth in China.
The elimination of the US tax credit has created a transition period for the electric vehicle market in the United States, with demand expected to take time to reach a new equilibrium. Tesla has also faced challenges in key markets due to CEO Elon Musk’s political affiliations and increasing competition from Chinese companies such as BYD and European giants.
Despite its rapid growth, BYD has faced its own challenges, including profitability issues in its home market due to price-conscious consumers. To address this, the company has sought to expand its presence in foreign markets, establishing overseas production capacity and supply chains for electric vehicles. This geographical diversification is expected to help BYD navigate the complex global tariff environment.
In contrast, Tesla is potentially positioned for growth, with its autonomous technology playing an increasingly important role. Breakthroughs in its “full self-driving” offerings could boost sales, and the company has announced plans to begin production of its autonomous robotaxi model, the Cybercab, in April 2026. Additionally, Tesla has unveiled lower-priced versions of its Models 3 and Y, which could also contribute to increased sales.
As the electric vehicle market continues to evolve, the competition between BYD and Tesla is likely to intensify. With BYD poised to overtake Tesla in 2025 sales, the American company will need to adapt to changing market conditions and leverage its technological advancements to remain competitive. The outcome of this competition will have significant implications for the future of the electric vehicle industry, with both companies playing important roles in shaping the market.