Tesla's Reign Ends: Profits Slump 46% as BYD Takes Top EV Seller Crown in 2025

For over a decade, “Tesla” was synonymous with “electric car.” It was the disruptor, the inevitable future, the stock that defied gravity. But as the dust settles on 2025, that era of undisputed dominance is officially over.

In a financial report released yesterday that shocked even the most bearish analysts, Tesla confirmed what many had seen coming: the crown has been passed. The company reported a stinging 46% slump in annual profits, falling to $3.8 billion, while its yearly revenue dipped for the first time in history.

But the headline that will arguably hurt CEO Elon Musk the most isn’t about money—it’s about volume. For the full year of 2025, Tesla delivered 1.64 million vehicles, an 8.6% decline from the previous year. Meanwhile, Chinese juggernaut BYD didn’t just pass Tesla; it left it in the rearview mirror, selling a staggering 2.26 million pure electric vehicles (excluding their millions of hybrids).

Table of Contents

The Perfect Storm

How did the pioneer of the EV revolution fall behind so quickly? It wasn’t one thing, but a “death by a thousand cuts” scenario.

The China Factor: BYD has done what Tesla promised but struggled to deliver—truly affordable EVs for the masses. With vertical control over their batteries and chips, BYD flooded the market with high-tech cars at prices Tesla’s aging Model 3 and Y couldn’t match.
The “Musk” Effect: 2025 was the year the brand’s image arguably detached from its product. Between controversial political stances and the distraction of managing X (formerly Twitter) and xAI, a significant chunk of Tesla’s core demographic in Europe and the U.S. simply looked elsewhere.
Stale Showroom: The decision to lean entirely on the Cybertruck—a niche, polarizing vehicle—while leaving the bread-and-butter sedans largely unchanged for years, proved costly.

The Great Pivot: “We Are an AI Company”

Facing a saturated car market, Tesla is effectively resigning from the volume race to bet the house on a different future.

In a move that signals the end of an era, reports indicate Tesla is discontinuing the Model S and Model X—the very cars that put it on the map—to free up factory lines for the “Cybercab” and AI initiatives. Musk confirmed the company is pouring $2 billion into xAI, intertwining the carmaker’s fate with his artificial intelligence startup.

“The vast majority of miles traveled will be autonomous in the future,” Musk told investors, essentially asking them to value Tesla not as a car company, but as a robotics firm.

It’s a bold, terrifying gamble. Tesla is trading the tangible business of selling cars for the promise of a robotaxi future that is still, for now, just out of reach. For 2026, the question isn’t whether Tesla can reclaim the crown from BYD—that ship has sailed. The question is whether it can survive its own metamorphosis.