Tesla faces slowdown in Q4 deliveries as US tax credit ends

Tesla closed 2025 with 1.64M EVs delivered, down 9% from 2024, as US tax credit removal and rising competition from China’s BYD weigh on demand.

Nathaniel Alexander Abaño January 3, 2026

Despite a strong third quarter in which Tesla sold 497,099 vehicles ahead of the federal tax credit expiration, the loss of the incentive in the fourth quarter appears to have driven the slowdown. Image by: Tesla Fans Schweiz / Unsplash

Tesla closed 2025 with 1.64 million vehicles delivered globally, marking a 9% decline from 1.79 million in 2024, as competition from Chinese automakers and the removal of the US federal electric vehicle (EV) tax credit weighed on demand.

Fourth-quarter deliveries totaled 418,227, down 15.6% year-on-year, below analysts’ expectations, prompting Tesla shares to drop over 2% in early trading, according to a statement released Friday.

Sales slowdown

The automaker produced 434,358 vehicles in the fourth quarter, including 422,652 Model 3/Y units and 11,706 of its “other models,” which encompass the Cybertruck, Model S, and Model X. Tesla also deployed a record 14.2 GWh of energy storage products in the quarter, bringing 2025 totals to 46.7 GWh.

Despite a strong third quarter in which Tesla sold 497,099 vehicles ahead of the federal tax credit expiration, the loss of the $7,500 incentive in the fourth quarter appears to have driven the slowdown.

CEO Elon Musk has emphasized the company’s broader focus on “sustainable abundance,” aiming to expand revenue streams through AI, robotics, energy generation, and battery storage. Yet EVs remain Tesla’s primary income source, contributing $21.2 billion of $28 billion in third-quarter revenue.

BYD overtakes

Tesla’s global leadership has now been overtaken by China’s BYD, which delivered 2.26 million EVs in 2025, reflecting the growing strength of Chinese manufacturers in both domestic and international markets. In Europe, Tesla has also faced rising competition, although Chinese EVs remain largely absent in the US market.

Looking ahead, Tesla has projected total deliveries of 1.75 million vehicles in 2026, with energy storage deployments expected to reach 63.9 GWh. While the company continues to push its EV and energy products, it faces mounting pressure to regain market share and adapt to shifting incentives and competitive dynamics.

Tesla plans to release its full Q4 2025 financial results on January 28, 2026, following which management will host a webcast to discuss performance and outlook.