Tesla’s fully electric vehicle deliveries fell by 9% year-over-year in 2025, dropping from 1.79 million units in 2024 to 1.64 million units. The fourth quarter saw an even steeper decline of 16%, with 418,227 vehicles delivered versus 498,000 units in the same period of 2024. This marks the first time since Tesla’s IPO that annual deliveries have contracted two years in a row, ending a streak of uninterrupted growth that began in 2011.

The expiration of the U.S. federal EV tax credit removed a $7,500 purchase incentive that had bolstered consumer demand, contributing to a 12% drop in U.S. deliveries in the first quarter after credits expired. At the same time, Chinese automakers have aggressively expanded into Europe and other markets, offering lower-priced electric models with comparable range. Tesla’s refreshed Model Y and the introduction of a lower-priced variant did not halt the company’s sales decline, suggesting pricing alone is insufficient to counter increased competition and softer consumer sentiment.

While automotive deliveries declined, Tesla’s energy storage deployments surged by 49% in 2025 to a record 14.2 gigawatt hours, up from 9.5 GWh in 2024. The energy segment now contributes roughly 25% of total revenue, compared with 18% a year earlier. In parallel, the company continues to invest in its Full Self-Driving software and Optimus humanoid robot projects, promising potential revenue streams beyond vehicle sales. Investors will be watching first-quarter delivery figures, automotive gross margin trends, and concrete milestones for autonomous driving and robotics development as indicators of whether Tesla’s strategic pivot can offset core automotive headwinds.