I’ve been tracking this collision for months, and now it’s official: the company that defined the EV revolution just lost its crown while Wall Street threw a party. Tesla’s 2025 deliveries dropped 8.6% to 1.64 million vehicles, handing BYD the title of world’s largest electric vehicle maker by a margin of more than 620,000 units. Yet Tesla stock touched $489.88 last month, an all-time high.

That disconnect tells you everything you need to know about where Tesla is headed, and what it means for anyone considering a Tesla purchase or investment.

What: BYD sold 2.26 million BEVs in 2025, surpassing Tesla’s 1.64 million deliveries for the first time on an annual basis
Who: Tesla CEO Elon Musk, whose focus has shifted to robotaxis and humanoid robots, versus BYD, the Chinese automaker Musk laughed at in a 2011 interview
When: Tesla reported Q4 2025 deliveries on January 2, 2026, confirming 418,227 deliveries (down 15.6% YoY)
Why it matters: Tesla’s stock price is decoupling from its automotive business, investors are betting on robotaxi and Optimus robot revenue that doesn’t exist yet

The numbers come from Reuters reporting and company disclosures released this week.

The Numbers Nobody Wants to Talk About

Global EV sales grew 28% in 2025. BYD’s battery-electric sales grew 27.9%. Tesla’s deliveries dropped 8.6%. That’s not a company facing headwinds. That’s a company going backward while the market surges forward.

The fourth quarter was particularly brutal. Tesla delivered 418,227 vehicles, down 15.6% from 495,570 a year earlier and missing even the lowered analyst estimate of 434,487. For perspective, Tesla published those pessimistic analyst estimates on its own investor relations website, a first for the company, and still came in below them.

Tesla’s full-year 2025 deliveries of 1.64 million compare to 1.79 million in 2024, which was already a 1% decline from 2023. Two consecutive years of falling sales, the biggest annual drop in company history, and the stock is near record highs.

Why Wall Street Doesn’t Care About Car Sales Anymore

Here’s the quote that captures everything: “Investors are so focused on the future with Tesla that they are ignoring delivery numbers. It’s about Optimus, Robotaxi and physical AI,” said Dennis Dick, a trader at Triple D Trading, which owns Tesla shares.

Tesla shares fell about 2% on the delivery news, then recovered. The stock finished 2025 with an 11% gain despite posting its worst sales performance ever. That’s not normal market behavior for an automaker. It’s how investors treat a technology company with automotive revenue they’re willing to ignore.

This is the logical endpoint of what we documented when shareholders approved Musk’s $1 trillion compensation package while European sales cratered. Investors aren’t buying Tesla the car company. They’re buying Tesla the robotics company, the AI company, the energy storage company. The automotive business is just overhead to them.

The Tax Credit Hangover We Predicted

We’ve been warning about this since July. The September 30 expiration of the $7,500 federal EV tax credit was always going to create a Q3 pull-forward followed by a Q4 collapse. Tesla’s record third-quarter deliveries of 497,099 vehicles were artificial, buyers rushing to lock in $7,500 before it vanished.

Now the hangover is here. The Reuters report notes Tesla’s Q4 figures “come after third-quarter deliveries were supported by a rush to lock in $7,500 in federal tax credits after President Donald Trump’s administration decided to pull the plug on the incentive in September.”

U.S. EVs accounted for just 6.2% of retail vehicle sales in Q4, down 3.6 percentage points from a year earlier. Average transaction prices rose nearly $6,000 to $53,300, according to J.D. Power. Without subsidies, EVs got more expensive and sold worse. This is exactly what we predicted when we covered Trump’s replacement tax break that offers maybe $660 in actual savings to middle-income buyers.

BYD: The Company Musk Laughed At

In October 2011, Bloomberg TV asked Elon Musk about BYD as a competitor. He laughed and said, “I don’t think they have a great product.”

Fourteen years later, BYD outsold Tesla by more than 620,000 battery-electric vehicles in a single year. BYD’s BEV sales hit 2.26 million units, up 27.9% year-over-year. Their overseas sales surpassed 1 million units for the first time, up 150% from the previous year. They’re building factories in Hungary, Turkey, and potentially Spain to neutralize EU tariffs.

As we documented in October, BYD launches cars twice as fast as Tesla. They introduced at least 17 SUV models from 2020 through 2025, roughly double the number of redesigned Ford SUVs in that period. Tesla, meanwhile, killed its $25,000 Model 2 project and is still selling the same Model 3 and Model Y platforms designed between 2017 and 2020.

The contrast couldn’t be starker. BYD is flooding every segment with fresh products. Tesla is relying on cost-cut versions of aging models while its CEO talks about robots.

What This Means for Tesla Buyers and Owners

If you’re considering a Tesla, understand what you’re buying into. The company’s leadership and investors are explicitly focused on robotaxis, humanoid robots, and AI, not on improving the Model Y you’re about to purchase. The stripped-down versions Tesla introduced in October, priced under $40,000 for Model Y and under $37,000 for Model 3, are cost-cut variants of existing platforms, not new vehicles.

For current Tesla owners, this matters for resale values. Tesla’s declining market share, particularly the 48.5% European sales collapse we documented in November, puts downward pressure on used Tesla prices. When the market leader is going backward while competitors surge forward, your three-year-old Model 3 faces stiffer competition from both new Teslas and new rivals.

Europe is particularly brutal. Tesla’s new vehicle registrations for the first 11 months of 2025 totaled just 203,382 units, a 28% decrease from 282,335 units in the same period of 2024. BYD’s European registrations in that same period hit 159,869 units, up 276%.

EVXL’s Take

I’ve spent the last year documenting Tesla’s sales crisis across every major market. Europe down 48.5%. China at three-year lows. The U.S. market collapsing after the tax credit expired. The numbers tell a consistent story: Tesla is losing the automotive race while betting everything on products that don’t exist yet.

Here’s what I expect: Tesla’s Q1 2026 will be ugly. Without tax credits pulling demand forward, without fresh products to excite buyers, and with Musk’s focus visibly elsewhere, deliveries will struggle. Analysts are already projecting a 3% drop in Q4 sales and a nearly 40% drop in earnings per share. If Q1 confirms that trajectory, even the robotaxi believers will start asking questions.

The irony is thick. Tesla created the modern EV market. They proved electric cars could be desirable, not just dutiful. And now they’re abandoning that market to chase robots and AI while BYD, the company Musk laughed at, takes the crown Tesla worked a decade to build.

For prospective buyers, the calculus has changed. You’re not buying from the market leader anymore. You’re buying from a company whose investors have explicitly told you they don’t care about cars. Whether that matters to you depends on whether you’re buying a Tesla for the product or for the brand. The product hasn’t fundamentally changed since 2020. The brand is now something else entirely.

Are you reconsidering a Tesla purchase given this shift in company focus? Let us know in the comments.