Tesla reported a steeper-than-expected fall in fourth-quarter vehicle deliveries on Friday and posted its second consecutive annual decline in sales, underscoring mounting challenges in sustaining demand for its electric vehicles after the withdrawal of key tax incentives.
The results have intensified questions about Tesla’s ability to stabilise its core automotive business even as it pivots toward futuristic ventures such as self-driving technology, robotaxis and humanoid robots to support its lofty valuation. Tesla said it delivered 418,227 vehicles in the October to December quarter, a 15.6% decline from 495,570 a year earlier. Analysts had expected deliveries of 434,487 vehicles, or a 12.3% drop, according to Visible Alpha.
For the full year, Tesla delivered 1.64 million vehicles, down from 1.79 million in the previous year, marking its second straight annual decline. Analysts had forecast deliveries of about 1.65 million vehicles. Despite the weaker numbers, Tesla shares were marginally higher in early trading.
Investors appear increasingly focused on Tesla’s ambitions beyond traditional car sales. “I think the market remains focused on the robotaxi business, where Tesla is testing its Cybercab in Austin,” said Seth Goldstein, senior equity research analyst at Morningstar. He added that if delivery declines remain contained in coming quarters, enthusiasm around the robotaxi programme could continue to support the stock.
Tesla’s fourth-quarter performance followed a temporary boost in third-quarter deliveries, when buyers rushed to secure U.S. electric vehicle tax credits before they expired at the end of September. Demand softened sharply after the incentives were withdrawn, with the Trump administration ending the $7,500 federal EV credit, contributing to a broader slowdown in the U.S. market.
The company is also facing intensifying global competition. Chinese rival BYD said sales outside China climbed to a record 1 million vehicles in 2025, up about 150% from the previous year, and it aims to sell as many as 1.6 million vehicles abroad in 2026. With global EV sales rising nearly 28% last year to 2.26 million units, BYD overtook Tesla for the first time on an annual basis, driven by rapid growth in Europe.
In response to pressure on volumes, Tesla in October launched stripped-down “Standard” versions of the Model Y and Model 3, priced about $5,000 below earlier base models. Analysts say the company faced intense pressure throughout 2025 in North America and Europe, where competition has surged and brand sentiment has been hit by backlash over chief executive Elon Musk’s political rhetoric.
Even as vehicle deliveries weakened, Tesla shares gained about 11.4% in 2025, adding to Musk’s wealth. Investor optimism is increasingly tied to Tesla’s push into robotaxis, advances in self-driving technology and the development of humanoid robots, even though electric vehicle sales continue to generate the vast majority of the company’s current revenue.
