Tesla reported fourth-quarter vehicle deliveries of 418,227 units, falling short of the consensus estimate of 422,850 and marking a 16% year-over-year decline from 490,570 units in the same period of 2024. This represents the second consecutive quarter of falling sales, with full-year deliveries totaling 1,636,129 vehicles, down 8.5% from 1,785,123 in 2024. The weaker-than-expected performance has raised concerns about near-term revenue growth and margin pressure in the core automotive business.

U.S. electric vehicle demand slowed sharply after the $7,500 federal tax credit expired on September 30. Sales spiked to an 11.6% market share in September as buyers rushed to qualify, but plunged 50% in October, dropping EV share to 5.9%. Automakers forecast that without incentives, EV penetration could fall to around 5%, exacerbating revenue headwinds for smaller manufacturers and putting pressure on Tesla’s domestic volume as consumers delay purchases.

Chinese rival BYD surpassed Tesla in pure EV deliveries, delivering 2.26 million units in 2025—a 28% increase year over year—while Tesla’s deliveries fell 9% to 1.64 million. Aggressive international expansion by BYD, particularly in Europe, and a broader lineup of lower-priced models have intensified competition. In Norway, where EV registrations reached 97.6% in December thanks to favorable tax treatment, Tesla still leads with a 19.1% market share, but upcoming VAT changes threaten to push up prices on its best-selling models by as much as 75,000 crowns.

Beyond vehicles, Tesla deployed a record 46.7 gigawatt-hours of energy storage products in the fourth quarter, up nearly 50% year over year, as data-center operators and utilities accelerated capacity builds. Wall Street strategists view 2026 as pivotal for commercialization of the robotaxi service and full self-driving software, with production pilots slated to begin mid-year. Investors are watching whether these non-automotive segments can compensate for slowing vehicle sales and drive long-term earnings growth.