Tesla’s outlook darkens as BYD lifts global sales
Kara Carlson, Linda Lew, Danny Lee And Bei Hu
Tesla finished last year on a high as investors increasingly embraced Elon Musk’s enthusiasm for autonomous vehicles. Winning over actual car buyers was another story.
Shares of the world’s most valuable car company rose in the second half, largely as the CEO touted advances in artificial intelligence and robotics. But the progress Musk declared didn’t translate into success in showrooms; Despite record deliveries in the third quarter, the company likely sold fewer vehicles in the last six months than it did a year ago.
Tesla is expected to report on Friday that it delivered about 440,900 vehicles in the fourth quarter, down 11 percent from a year earlier, according to data compiled by Bloomberg. This week, Tesla took the unusual step of issuing its own even more pessimistic average analyst forecast, calling for a 15 percent decline.
Wall Street has become similarly pessimistic about the outlook for 2026. This time two years ago, analysts predicted that Tesla would deliver more than 3 million vehicles. The average estimate for this year’s deliveries has fallen to roughly 1.8 million.
“Tesla investors are focusing on what the company might look like five, 10, 15 years from now and really discounting what they see in the near term,” said Garrett Nelson, stock analyst at CFRA Research. “The question is, can they maintain that, especially as we think financial headwinds are going to become more pronounced?”
Chinese rival
By contrast, BYD, China’s largest automaker, hit its full-year sales target and will likely overtake Tesla to become the world’s largest electric vehicle maker in 2025; This is a milestone that is overshadowed by the challenging outlook for the Chinese auto market next year.
According to the statement, the automaker delivered 4.6 million vehicles last year, an increase of 7.7 percent compared to 2024. This is in line with the company’s full-year guidance, which it lowered in September.
BYD and its rivals will face increasing pressure next year as China reduces some incentives that support EV purchases. The influx of new models is also making domestic competition fiercer, while trade barriers are also challenging BYD’s goals of expanding abroad.
BYD faced tougher competition last year from Geely Automobile Holdings and Xiaomi, whose new models and rapid innovations won the admiration of consumers.
Wang Chuanfu, BYD’s CEO, said at an investor meeting in early December that the technological progress the company has made in the past few years has diminished and affected domestic sales.
According to reports in Chinese media, he hinted that new technology breakthroughs would come as the company’s 120,000-strong engineering team gave him confidence in its ability to regain advantages.
The bright spot for BYD was the increase in overseas sales. Deliveries outside China reach 1.05 million in 2025.
Mixed-Turvy
Even by the standards of Musk and Tesla (two names synonymous with turbulence), 2025 was a turbulent year.
The automaker’s vehicle sales are off to a dismal start, in part because the company is rearranging production lines at all its auto plants for the redesigned Model Y, its most popular vehicle. Another important factor was the intense backlash against Musk’s work for US President Donald Trump.
Tesla’s shares had lost 45 percent of their value for the year by early April, when Musk got into a public fight with members of his administration over tariff policy.
Musk has spurred the recovery by stepping back from the government and returning to work on a long-standing goal: launching a ride-hailing business with cars he says will eventually be autonomous.
In June, Tesla launched an invitation-only Robotaxi service in Austin, with security operators to inspect each of the Model Ys ferrying Musk fans through the Texas capital. While the vehicles violated traffic laws from day one, they caught the attention of federal regulators who launched multiple investigations into the company’s driving systems, while investors shrugged off safety concerns.
Tesla’s board later proposed a new compensation package for Musk in September; That package offered a payout worth potentially $1 trillion based on milestones, including millions of robotaxi deliveries. Shortly thereafter, the return was completed; Tesla shares have been trading higher this year.
By the time the stock closed at an all-time high on Dec. 16, the company had added more than $915 billion in market value in just over eight months.
driver assistant
But while Tesla’s robotaxi prospects have fascinated investors, car buyers have been relatively cautious.
Tesla’s attempt to differentiate itself with driver assistance functions in China’s crowded electric vehicle market is also not working, as companies such as BYD and Xiaomi offer similar systems as standard features.
Largely due to BYD’s much higher sales in China and increased momentum in Europe, where Tesla has failed to win regulatory approval for its fully autonomous (supervised) system, analysts expect the Shenzhen-based automaker to sell more battery electric vehicles worldwide for the fifth consecutive quarter.
Bloomberg
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