Elon Musk's Tesla is no longer the top electric vehicle seller in the world as demand at home has cooled while competition heated up abroad.

Tesla lost its pole position after reporting 1.64 million deliveries in 2025, roughly 620,000 fewer than Chinese competitor BYD.

Tesla struggled last year amid increasing competition, waning federal support for electric vehicle adoption and brand damage triggered by Musk's stint in the White House.

Musk is turning his focus toward robotics and autonomous driving technology in an effort to keep Tesla relevant as its EVs lose popularity.

On Friday, the company reported lower than expected delivery numbers for the fourth quarter of 2025, a decline from the previous quarter and a year-over-year decrease of 16%. Tesla delivered 418,227 vehicles in the fourth quarter and produced 434,358.

Read more: Tesla shares drop amid auto tariffs and 'brand crisis'

According to a company-compiled consensus from analysts posted on Tesla's website in December, the company was projected to deliver nearly 423,000 vehicles in the fourth quarter.

Tesla's annual deliveries fell roughly 8% last year from 1.79 million in 2024. Its third-quarter deliveries saw a boost as consumers rushed to buy electric vehicles before a $7,500 tax credit expired at the end of September.

"There are so many contributing factors ranging from the lack of evolution and true innovation of Musk's product to the loss of the EV credits," said Karl Brauer, an analyst at iSeeCars.com. "Teslas are just starting to look old. You have a bunch of other options, and they all look newer and fresher."

BYD is making premium electric vehicles at an affordable price point, Brauer said, but steep tariffs on Chinese EVs have effectively prevented the cars from gaining popularity in the U.S.

Other international automakers like South Korea's Hyundai and Germany's Volkswagen have been expanding their EV offerings.

In the third quarter last year, the American automaker Ford sold a record number of electric vehicles, bolstered by its popular Mustang Mach-E SUV and F-150 Lightning pickup truck.

Read more: This Long Beach studio is designing America’s cheapest EV truck

In October, Tesla released long-anticipated lower-cost versions of its Model 3 and Model Y in an attempt to attract new customers.

However, analysts and investors were disappointed by the launch, saying the models, which start at $36,990, aren't affordable enough to entice a new group of consumers to consider going green.

As evidenced by Tesla's continuing sales decline, the new Model 3 and Model Y have not been huge wins for the company, Brauer said.