Back in 2011, Tesla CEO Elon Musk chuckled at the mere suggestion that Chinese automaker BYD was a legitimate competitor. Fourteen years later, the laughing has stopped, mostly because the guy he dismissed just stole his lunch money and his title.
The American EV pioneer has been officially dethroned by a company that accomplishes the feat without selling a single car in the United States. It appears the “Department of Government Efficiency” could not prevent the efficient dismantling of Tesla’s global dominance by a rival that wasn’t supposed to exist.
BYD announced this week that it shifted a staggering 2.26 million electric vehicles in 2025, leaving Tesla in the dust with a mere 1.6 million deliveries. Tesla reported its second straight year of declining sales, recording an 8.6% drop that marks the biggest annual stumble in company history.
The defeat carries a particular sting because BYD managed to win the race while being banned from the American market. China, Tesla’s second-largest home, is now the headquarters of the company that beat them at their own game.
The fourth quarter was especially harsh for the American automaker, with sales plummeting 15.6%. American drivers had apparently rushed to buy cars in the third quarter to snag a $7,500 tax credit before it expired on October 1.
Once the government handout vanished, so did the customers.
The sales slide coincided with Musk’s controversial foray into politics, which seems to have driven away more buyers than a “Check Engine” light. Protests became a regular fixture outside Tesla showrooms in Europe and the U.S., and some vehicles became the unfortunate victims of vandalism.
Desperate to stop the bleeding, Tesla released cheaper versions of the Model 3 and Model Y.
These budget-friendly options cost about $5,000 less but unfortunately cannot travel as far on a charge. It is the automotive equivalent of serving a steak dinner but forgetting the fork.
Meanwhile, BYD achieved its victory while enduring a gladiator-style battle in its home market. The company faces relentless price wars and competition from roughly 150 car brands, including Xiaomi, a company that previously made your phone.
The competition in China is so fierce that BYD’s market share actually slipped from 35% to 29%.
Even BYD founder Wang Chuanfu admitted to investors that the company’s technological lead is eroding faster than a cheap tire. Yet, despite admitting they are struggling, they still managed to outsell Tesla by a country mile.
Tesla investors seem remarkably unbothered by the fact that the company is selling fewer cars.
Shares closed the year up 18.6% because investors are apparently more interested in Musk’s promise of a robot army than actual car sales. The much-hyped robotaxi service is currently limited to Austin and San Francisco, which is a far cry from serving half the U.S. population as promised.
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