Tesla No Longer World's Biggest EV Maker After 'Customer Revolt' Over Musk Politics

Tesla has surrendered its long-held title as the world's largest electric vehicle manufacturer following a decline in sales for the second consecutive year. This shift has prompted questions about whether Elon Musk's increasingly polarising political activities are costing the company customers and affecting its market position.

The Austin-based automaker reported delivering 1.64 million vehicles in 2025, marking a 9% decrease compared to the previous year, according to PBS. Meanwhile, Chinese rival BYD has overtaken Tesla, selling approximately 2.26 million EVs during the same period. This represents a significant reversal for Musk, who had previously dismissed BYD as a serious competitor, while Tesla's meteoric rise seemed unstoppable.

What Is Behind Tesla's Decline?

Industry analysts suggest that a combination of factors, rather than a single cause, is driving Tesla's sales downturn. One notable factor is a purported 'customer revolt' against Musk's increasingly visible right-wing political involvement, though the precise impact remains difficult to measure.

Musk has previously served as a close adviser to former President Donald Trump and led the administration's controversial Department of Government Efficiency initiative before stepping back from these roles, according to Axios. Musk has also acknowledged 'some blowback' from his political activities, which he admits could be influencing consumer perceptions.

Beyond political controversy, other significant challenges have impacted Tesla's performance. The expiry of a $7,500 (£5,582) federal EV tax credit at the end of September removed a major purchasing incentive for American consumers, PBS reports. Additionally, analysts have noted that Tesla's core vehicle designs are beginning to show their age, with many models retaining largely unchanged body styles since their initial launch, according to Axios.

Tesla's fourth-quarter deliveries totalled 418,227 units, falling short of the 440,000 units forecast by analysts polled by FactSet. This marked Tesla's weakest fourth-quarter performance since 2022, Axios reports.

How Does This Affect Your Investment?

Despite these sales figures, Tesla's share price has demonstrated remarkable resilience. The stock increased by approximately 11% over the course of 2025, with investors appearing more focused on Musk's broader ambitions in autonomous vehicles and artificial intelligence.

Musk has repeatedly argued that declining car sales matter less now because Tesla's future lies in its robotaxi service, energy storage solutions, and humanoid robots designed for homes and factories — NBC News reports. The company recently launched a self-driving car service in Austin, Texas, with plans for significant expansion this year.

Analysts forecast a modest 3% decline in revenue for Tesla's upcoming fourth-quarter earnings, expected in late January. They also anticipate a nearly 40% drop in earnings per share, according to FactSet data cited by PBS. However, many believe this downward trend will stabilise and reverse as 2026 progresses.

Wedbush Securities analyst Dan Ives noted that Tesla's quarterly performance was 'much better than the whisper numbers' of around 410,000 deliveries, Axios reports. This suggests that some on Wall Street had prepared for worse results.

Can Tesla Reclaim Its Crown?

Tesla has responded by introducing more affordable vehicle options. In early October, the company unveiled stripped-back versions of the Model Y and Model 3, now retailing for under $40,000 (£30,000) and $37,000 (£27,534) respectively, PBS reports. These budget-friendly models are part of Tesla's strategy to compete with increasingly sophisticated Chinese rivals in European and Asian markets.

Meanwhile, Musk's personal wealth continues to grow, despite recent market struggles. The Delaware Supreme Court recently overturned a decision that had blocked a $55 billion (£41 billion) pay package awarded to Musk in 2018. Shareholders also approved another potentially lucrative compensation deal in November, NBC News reports.

Whether Tesla can mount a comeback depends heavily on the success of its autonomous vehicle strategy and whether it gains a significant competitive edge before rivals further close the gap. For now, the EV race has a new leader.