Tesla sales fell by nearly nine per cent in 2025 to 1.64 million vehicles sold worldwide - its second consecutive year of declining car deliveries.

The figure placed Tesla behind BYD for the first time, which confirmed that sales of its battery-powered cars increased last year by nearly 28 per cent to over 2.25 million.

Tesla endured a challenging year in 2025 with a mixed response to new cars and unease about Musk's political activities.

The company's sales fell by 16 per cent in the final three months of 2025, which was partly caused due to a repeal of a US government subsidy that reduced the price of certain battery electric vehicles by as much as $7,500.

Chinese rivals such as BYD, Geely and MC have also put pressure on Tesla by pricing their vehicles less than established brands.

Musk - the world's richest man - faces the challenge of significantly improving Tesla's sales and stock market value over the next decade if he is to land a record-breaking pay package totalling as much as $1 trillion.

As part of the agreement, the tycoon has to sell a million humanoid robots over the next 10 years.

Tesla has invested heavily in its "Optimus" product and self-driving "Robotaxis".

Analysts feel that Tesla's robotaxi and self-driving rollout in 2026 will be critical to its overall performance.

Although BYD has surpassed Tesla globally, its sales growth slowed in 2025 to its weakest rate in five years as a result of fierce competition from rivals in its key China market.