Tesla reported fourth-quarter vehicle deliveries of 418,227 units, a 16% year-over-year decline and below Wall Street consensus estimates of approximately 426,000 units. This marks the second consecutive year of quarterly delivery declines for the company. Full-year deliveries totaled 1.64 million vehicles, representing an 8.5% drop from the prior year. CEO Elon Musk conceded that the expiration of the federal electric vehicle tax credit and the resulting pull-forward of demand into the third quarter created headwinds that weighed on year-end performance.

After the $7,500 federal EV incentive expired on September 30, U.S. electric-vehicle market share slid from a peak of 11.6% in September to just 5.9% in October. Tesla’s deliveries in the domestic market were particularly affected, contributing to a broader 50% month-over-month plunge in total EV registrations. Smaller EV startups have reported even steeper declines; for example, Rivian delivered 13,702 vehicles in the third quarter and Lucid posted a net loss of $978 million in that period, underscoring the challenges faced by lower-volume producers without Tesla’s scale.

With Tesla’s deliveries down 9% for the full year, China’s BYD surged ahead, reporting a 28% increase in pure-battery EV sales to 2.26 million units in 2025. BYD’s aggressive international expansion, particularly in Europe, and competitive pricing strategy enabled it to overtake Tesla as the world’s top EV maker. This shift highlights intensifying competition from lower-cost Chinese automakers and signals a pivotal moment in the global EV market structure.

While automotive volumes have softened, Tesla’s non-vehicle segments delivered record results. Energy storage deployments in the fourth quarter rose to 46.7 gigawatt-hours, a nearly 50% year-over-year increase, driven by strong demand from data centers and renewable-power integration projects. Looking ahead, analysts at Morgan Stanley and others view 2026 as a critical year for Tesla’s robotaxi commercialization and full-self-driving ambitions. Continued execution in energy, robotics and autonomy could be the primary drivers of the company’s valuation going forward.