Tesla reports 16% drop in Q4 deliveries amid rising global EV competition

Tesla reported 418,227 vehicle deliveries in the fourth quarter of 2025, marking a 16% decline year over year and falling short of Wall Street expectations, according to the company’s production and delivery update released Friday.

The electric vehicle maker produced 434,358 vehicles during the quarter, while total deliveries for the full year reached 1.64 million, down 8.6% from 2024, extending the company’s annual delivery decline for a second consecutive year. Tesla’s total production for 2025 stood at 1.65 million vehicles.

Analysts tracked by StreetAccount had expected approximately 426,000 deliveries for the quarter. A company-compiled consensus published in late December projected deliveries of 422,850 vehicles, reflecting expectations of a double-digit decline from the prior year.

Tesla delivered 495,570 vehicles in the fourth quarter of 2024, highlighting the scale of the slowdown. Production also slipped on a yearly basis, declining 5.5% compared with the same period last year.

Model 3 and Model Y dominate deliveries

Tesla said deliveries of its Model 3 sedan and Model Y SUV accounted for 406,585 vehicles, representing roughly 97% of total fourth-quarter deliveries. Higher-end models, including the Model S, Model X, and Cybertruck, contributed 11,642 vehicles combined.

Despite strong early interest in the Cybertruck following its design debut, the vehicle has yet to become a major volume driver for the company. Reports indicate that SpaceX, another company led by Elon Musk, purchased tens of millions of dollars’ worth of Cybertrucks during 2025.

Competitive pressures intensify globally

Tesla continues to face mounting competition across key global markets. Chinese automaker BYD overtook Tesla as the world’s largest EV seller in 2025, reporting 2.26 million vehicles sold, a 28% annual increase.

Additional pressure has come from manufacturers including Kia, Hyundai, Volkswagen, and emerging Chinese brands such as Xiaomi and Geely, particularly in Europe and Asia.

Industry data from the European Automobile Manufacturers’ Association showed Tesla’s vehicle registrations in Europe declined 39% during the first 11 months of 2025, while BYD’s registrations in the region surged 240%. Battery electric vehicles accounted for roughly 16% of all new vehicles sold in Europe last year.

Policy shifts weigh on U.S. sales

In the United States, Tesla’s sales were affected by the early expiration of a $7,500 federal EV incentive, which ended on Sept. 30. The policy change pulled some demand forward into the third quarter, leaving weaker momentum toward year-end.

Tesla also navigated reputational challenges during the year as Musk’s political activity and public statements drew criticism in both the U.S. and Europe, contributing to consumer backlash in some markets.

Energy business shows continued growth

While vehicle deliveries slowed, Tesla reported strength in its energy segment. The company deployed 14.2 gigawatt-hours of battery energy storage systems in the fourth quarter, following a prior quarterly record of 12.5 GWh. The products are used for residential backup power as well as large-scale utility and data center applications.

Outlook and upcoming earnings

Tesla is scheduled to report its fourth-quarter financial results on Jan. 28. Some analysts remain optimistic that sales of the company’s more affordable Model Y standard variant, launched in October, could support a recovery in coming quarters, particularly in emerging markets such as Thailand, Vietnam, and Brazil.

Despite weaker delivery numbers, Tesla shares rallied in the second half of 2025, reaching a record high in December. Shareholders approved a new long-term compensation plan for Musk in November, granting the CEO additional shares and expanded control over the company.