Once dismissed by Elon Musk, China’s BYD now leads a fractured global EV race
MARKET INSIDER – The global electric vehicle hierarchy has quietly flipped. After more than a decade of Tesla dominance, China’s BYD has overtaken Tesla to become the world’s largest seller of electric vehicles—marking a symbolic and strategic turning point in the EV industry that extends far beyond unit sales.
According to full-year 2025 figures released by both companies, BYD sold 2.26 million electric vehicles, up nearly 28% year on year. Tesla delivered just 1.6 million vehicles, down 8.6%—its steepest annual decline on record and the second consecutive year of falling sales. The reversal is especially striking given that BYD does not yet sell passenger EVs in the US, while China remains Tesla’s second-largest market.
Tesla’s slowdown became more pronounced in the fourth quarter, when deliveries fell 15.6% from a year earlier to about 418,000 vehicles. Analysts point to a pull-forward effect in the US, where buyers rushed to secure vehicles before the $7,500 federal EV tax credit expired on October 1. With the US accounting for nearly half of Tesla’s revenue, the cliff-edge impact was hard to offset elsewhere—particularly as other automakers also reported weak late-year EV demand in the American market.
Beyond incentives, Tesla is confronting structural headwinds. After years of near-50% annual delivery growth, momentum stalled in 2024 and deteriorated further in 2025 amid intensifying competition from both Chinese rivals and legacy automakers. The company has also faced consumer backlash tied to the political activities of CEO Elon Musk, including protests and vandalism at Tesla sites in the US and Europe when Musk took on a high-profile role in the Trump administration. Cheaper versions of the Model 3 and Model Y helped at the margin, but reduced range and stripped-down features limited their appeal.
BYD’s ascent, however, has not been effortless. The Shenzhen-based automaker secured global leadership in the midst of a brutal price war in China that has squeezed margins and forced aggressive overseas expansion—often into markets erecting tariffs and regulatory barriers. While total BYD sales, including hybrids, topped 4.6 million units last year, growth slowed to its weakest pace in five years, and profits declined in the second and third quarters.
Competition at home remains fierce. China’s auto market hosts roughly 150 brands and more than 50 EV manufacturers, with challengers such as Geely, Leapmotor, and even smartphone maker Xiaomi steadily chipping away at BYD’s dominance. Market share has slipped from 35% in 2023 to about 29% in the first 11 months of 2025. Speaking to investors in December, Chairman and CEO Wang Chuanfu conceded that BYD’s technological edge is narrowing, though he promised a new wave of innovation.
Investors, meanwhile, continue to give Tesla the benefit of the doubt. Despite falling deliveries, the stock rose 18.6% in 2025, buoyed by faith in Musk’s long-term vision—from robotaxis to humanoid robots. Yet reality has lagged rhetoric: Tesla’s robotaxi service currently operates in only two US cities, far short of its promised national footprint.
The broader takeaway is clear. The EV race has entered a new phase—one defined not by a single dominant leader, but by relentless competition, thinner margins, and regional fragmentation. Tesla is no longer unchallenged, and BYD’s crown comes with mounting pressure. For the global auto industry, leadership in electric vehicles is no longer a destination—it is a moving target.
