Chinese BYD is the world's largest electric vehicle manufacturer

(Patria) - American company Tesla has faced a difficult year marked by unease due to the political activities of its CEO Elon Musk and strong foreign competition.

Tesla has lost its crown as the world's largest electric vehicle manufacturer by sales. The company has had a demanding year, with concerns about Musk's political involvement and strong competition from abroad, leading to a sales drop for the second consecutive year, writes Sky News.

Tesla announced that it delivered 1.64 million vehicles in 2025, a decrease of 9% compared to the previous year.

Chinese rival BYD, which sold 2.26 million vehicles last year, is now the world's largest electric vehicle manufacturer.

Tesla's sales from October to December amounted to 418,227 vehicles, below the expectations of analysts surveyed by FactSet, who predicted 440,000 vehicles.

The sales results could also have been affected by the end of the $7,500 (£5,500) tax credit, which the Trump administration abolished at the end of September.

Despite this, Tesla shares ended 2025 with an increase of approximately 11%.

Investors hope that Musk will achieve his ambitions to make the company a leader in robotaxi services and encourage consumers to adopt humanoid robots capable of performing basic tasks in homes and offices.

Tesla shares rose nearly 2% before the market opened today, and in early trading, the price remained largely unchanged at $450.27.

The last quarter was the first to record sales of stripped-down, cheaper versions of the Model Y and Model 3, which Musk introduced in early October as part of efforts to revive sales.

The new Model Y costs slightly less than $40,000 (£30,000), while customers can get the cheaper Model 3 for less than $37,000 (£27,000).

The new versions are designed to help Tesla compete with Chinese models in Europe and Asia.

For the fourth-quarter financial results, which will be released at the end of January, analysts expect a 3% drop in sales and an almost 40% drop in earnings per share, according to FactSet data.

Analysts believe that the downward trend in sales and profits will reverse over time during this year.

In November, Musk received shareholder support for a compensation package that could bring him up to a trillion dollars (£742 billion) if the company meets a series of extremely ambitious goals in the next ten years.

Already the world's richest man, Musk achieved another major gain last month when the Delaware Supreme Court overturned a decision that had denied him a $55 billion (£408 billion) compensation package awarded to him by Tesla in 2018.