Tesla reported a 14% drop in second-quarter vehicle deliveries on Wednesday, marking its second consecutive year-over-year decline and adding pressure as Chinese rival BYD pulls further ahead in the global electric vehicle race.
The Austin-based automaker delivered 384,122 vehicles in Q2 2025, down from 443,956 in the same quarter last year. While the figure topped some analyst expectations, it represents the steepest annual sales drop in company history, with deliveries falling by nearly 60,000 units.
Tesla's total vehicle production for the quarter came in at 410,244. Most of the volume consisted of the Model 3 and Model Y, which accounted for 396,835 units produced and 373,728 units delivered. Wall Street had expected about 387,000 deliveries, according to FactSet.
Despite the decline, Tesla shares rose nearly 4% in early trading Wednesday, as results came in higher than some worst-case forecasts. Gene Munster of Deepwater Asset Management wrote on X that deliveries came in "4% above the whisper number" and said he expects Q2 to mark the bottom for the company's recent slide.
Tesla delivered 336,681 vehicles in the first quarter of 2025, a 13% drop from the year prior. The first-half total of approximately 721,000 vehicles now trails BYD, which announced earlier Wednesday it sold 1 million battery electric vehicles in the same period, extending its lead over Tesla.
Tesla's global sales are being squeezed by intensifying competition from both legacy automakers and aggressive Chinese EV firms, especially BYD, which offers cheaper and newer models. Although BYD has yet to enter the U.S. market, its dominance in China-Tesla's second-largest market-has further eroded Tesla's position.
At the same time, the company has faced public backlash linked to CEO Elon Musk's political activity. Musk, who served as head of President Donald Trump's Department of Government Efficiency (DOGE) until May, has become a polarizing figure, endorsing Germany's far-right AfD party and backing Trump in the 2024 election. That role has spurred protests and vandalism at Tesla showrooms in the U.S. and Europe, contributing to brand damage and falling sales.
Meanwhile, delays in Model Y refresh shipments during Q1 were blamed for soft demand, though updated models began shipping in March. Some investors are optimistic that the impact of delayed purchases will ease in the second half of the year.
Independent researcher Troy Teslike had forecast Q2 deliveries of 356,000 vehicles, while prediction market Kalshi pegged the number closer to 364,000. The better-than-feared outcome helped buoy investor sentiment despite long-term concerns.
