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Tesla no longer world's biggest EV maker as sales drop for second year

EV Update

Tesla sales were down yet again. Getty Images

Tesla lost its crown as the world’s bestselling electric vehicle maker as a customer revolt over Elon Musk’s right-wing politics, expiring U.S. tax breaks for buyers and stiff overseas competition pushed sales down for a second year in a row.

Tesla said that it delivered 1.64 million vehicles in 2025, down 9% from a year earlier.

Chinese rival BYD, which sold 2.26 million vehicles last year, is now the biggest EV maker.

It's a stunning reversal for a car company whose rise once seemed unstoppable as it overtook traditional automakers with far more resources and helped make Musk the world's richest man. The sales drop came despite President Donald Trump's marketing effort early last year when he called a press conference to praise Musk as a “patriot” in front of Teslas lined up on the White House driveway, then announced he would be buying one, bucking presidential precedent to not endorse private company products.

For the fourth quarter, Tesla sales totaled 418,227, falling short of even the much reduced 440,000 target that analysts recently polled by FactSet had expected. Sales were hit hard by the expiration of a $7,500 tax credit for electric vehicle purchases that was phased out by the Trump administration at the end of September.

Tesla stock fell 2.6% to $438.07 on Friday.

Even with multiple issues buffeting the company, investors are betting that Tesla CEO Musk can deliver on his ambitions to make Tesla a leader in robotaxi services and get consumers to embrace humanoid robots that can perform basic tasks in homes and offices. Reflecting that optimism, the stock finished 2025 with a gain of approximately 11%.

The latest quarter was the first with sales of stripped-down versions of the Model Y and Model 3 that Musk unveiled in early October as part of an effort to revive sales. The new Model Y costs just under $40,000 while customers can buy the cheaper Model 3 for under $37,000. Those versions are expected to help Tesla compete with Chinese models in Europe and Asia.

For fourth-quarter earnings coming out in late January, analysts are expecting the company to post a 3% drop in sales and a nearly 40% drop in earnings per share, according to FactSet. Analysts expect the downward trend in sales and profits to eventually reverse itself as 2026 rolls along.

Musk said earlier last year that a “major rebound” in sales was underway, but investors were unruffled when that didn't pan out, choosing instead to focus on Musk's pivot to different parts of business. He has has been saying the future of the company lies with its driverless robotaxis service, its energy storage business and building robots for the home and factory — and much less with car sales.

Tesla started rolling out its robotaxi service in Austin in June, first with safety monitors in the cars to take over in case of trouble, then testing without them. The company hopes to roll out the service in several cities this year.

To do that successfully, it needs to take on rival Waymo, which has been operating autonomous taxis for years and has far more customers. It also will also have to contend with regulatory challenges. The company is under several federal safety investigations and other probes. In California, Tesla is at risk of temporarily losing its license to sell cars in the state after a judge there ruled it had misled customers about their safety.

“Regulatory is going to be a big issue,” said Wedbush Securities analyst Dan Ives, a well-known bull on the stock. “We're dealing with people's lives.”

Still, Ives said he expects Tesla's autonomous offerings will soon overcome any setbacks.

Musk has said he hopes software updates to his cars will enable hundreds of thousands of Tesla vehicles to operate autonomously with zero human intervention by the end of this year. The company is also planning to begin production of its AI-powered Cybercab with no steering wheel or pedals in 2026.

To keep Musk focused on the company, Tesla’s directors awarded Musk a potentially enormous new pay package that shareholders backed at the annual meeting in November.

Musk scored another huge windfall two weeks ago when the Delaware Supreme Court reversed a decision that deprived him of a $55 billion pay package that Tesla doled out in 2018.

Musk could become the world's first trillionaire later this year when he sells shares of his rocket company SpaceX to the public for the first time in what analysts expect would be a blockbuster initial public offering.

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The U.S. National Highway Traffic Safety Administration has raised concerns about Tesla's public messaging on its "Full Self-Driving" system. Photo via tesla.com

US safety agency pressures Texas-based Tesla over full self-driving claims, crash concerns

The U.S. government's highway safety agency says Tesla is telling drivers in public statements that its vehicles can drive themselves, conflicting with owners manuals and briefings with the agency saying the electric vehicles need human supervision.

The National Highway Traffic Safety Administration is asking the company to “revisit its communications” to make sure messages are consistent with user instructions.

The request came in a May email to the company from Gregory Magno, a division chief with the agency's Office of Defects Investigation. It was attached to a letter seeking information on a probe into crashes involving Tesla's “Full Self-Driving” system in low-visibility conditions. The letter was posted Friday on the agency's website.

The agency began the investigation in October after getting reports of four crashes involving “Full Self-Driving" when Teslas encountered sun glare, fog and airborne dust. An Arizona pedestrian was killed in one of the crashes.

Critics, including Transportation Secretary Pete Buttigieg, have long accused Tesla of using deceptive names for its partially automated driving systems, including “Full Self-Driving” and “Autopilot,” both of which have been viewed by owners as fully autonomous.

The letter and email raise further questions about whether Full Self-Driving will be ready for use without human drivers on public roads, as Tesla CEO Elon Musk has predicted. Much of Tesla's stock valuation hinges on the company deploying a fleet of autonomous robotaxis.

Musk, who has promised autonomous vehicles before, said the company plans to have autonomous Models Y and 3 running without human drivers next year. Robotaxis without steering wheels would be available in 2026 starting in California and Texas, he said.

A message was sent Friday seeking comment from Tesla.

In the email, Magno writes that Tesla briefed the agency in April on an offer of a free trial of “Full Self-Driving” and emphasized that the owner's manual, user interface and a YouTube video tell humans that they have to remain vigilant and in full control of their vehicles.

But Magno cited seven posts or reposts by Tesla's account on X, the social media platform owned by Musk, that Magno said indicated that Full Self-Driving is capable of driving itself.

“Tesla's X account has reposted or endorsed postings that exhibit disengaged driver behavior,” Magno wrote. “We believe that Tesla's postings conflict with its stated messaging that the driver is to maintain continued control over the dynamic driving task."

The postings may encourage drivers to see Full Self-Driving, which now has the word “supervised” next to it in Tesla materials, to view the system as a “chauffeur or robotaxi rather than a partial automation/driver assist system that requires persistent attention and intermittent intervention by the driver,” Magno wrote.

On April 11, for instance, Tesla reposted a story about a man who used Full Self-Driving to travel 13 miles (21 kilometers) from his home to an emergency room during a heart attack just after the free trial began on April 1. A version of Full Self-Driving helped the owner "get to the hospital when he needed immediate medical attention,” the post said.

In addition, Tesla says on its website that use of Full Self-Driving and Autopilot without human supervision depends on “achieving reliability" and regulatory approval, Magno wrote. But the statement is accompanied by a video of a man driving on local roads with his hands on his knees, with a statement that, “The person in the driver's seat is only there for legal reasons. He is not doing anything. The car is driving itself,” the email said.

In the letter seeking information on driving in low-visibility conditions, Magno wrote that the investigation will focus on the system's ability to perform in low-visibility conditions caused by “relatively common traffic occurrences.”

Drivers, he wrote, may not be told by the car that they should decide where Full Self-Driving can safely operate or fully understand the capabilities of the system.

“This investigation will consider the adequacy of feedback or information the system provides to drivers to enable them to make a decision in real time when the capability of the system has been exceeded,” Magno wrote.

The letter asks Tesla to describe all visual or audio warnings that drivers get that the system “is unable to detect and respond to any reduced visibility condition.”

The agency gave Tesla until Dec. 18 to respond to the letter, but the company can ask for an extension.

That means the investigation is unlikely to be finished by the time President-elect Donald Trump takes office in January, and Trump has said he would put Musk in charge of a government efficiency commission to audit agencies and eliminate fraud. Musk spent at least $119 million in a campaign to get Trump elected, and Trump has spoken against government regulations.

Auto safety advocates fear that if Musk gains some control over NHTSA, the Full Self-Driving and other investigations into Tesla could be derailed.

Musk even floated the idea of him helping to develop national safety standards for self-driving vehicles.

“Of course the fox wants to build the henhouse,” said Michael Brooks, executive director of the Center for Auto Safety, a nonprofit watchdog group.

He added that he can't think of anyone who would agree that a business mogul should have direct involvement in regulations that affect the mogul’s companies.

“That’s a huge problem for democracy, really,” Brooks said.

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Fervo Energy officially files for initial public offering

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Fervo Energy has officially filed for IPO.

The Houston-based geothermal unicorn filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission on April 17 to list its Class A common stock on the Nasdaq exchange. Fervo intends to be listed under the ticker symbol "FRVO."

The number and price of the shares have not yet been determined, according to a news release from Fervo. J.P. Morgan, BofA Securities, RBC Capital Markets and Barclays are leading the offering.

The highly anticipated filing comes as Fervo readies its flagship Cape Station geothermal project to deliver its first power later this year

"Today, miles-long lines for gasoline have been replaced by lines for electricity. Tech companies compete for megawatts to claim AI market share. Manufacturers jockey for power to strengthen American industry. Utilities demand clean, firm electricity to stabilize the grid," Fervo CEO Tim Latimer shared in the filing. "Fervo is prepared to serve all of these customers. Not with complex, idiosyncratic projects but with a simplified, standardized product capable of delivering around-the-clock, carbon-free power using proven oil and gas technology."

Fervo has been preparing to file for IPO for months. Axios Pro first reported that the company "quietly" filed for an IPO in January and estimated it would be valued between $2 billion and $3 billion.

Fervo also closed $421 million in non-recourse debt financing for the first phase of Cape Station last month and raised a $462 million Series E in December. The company also announced the addition of four heavyweights to its board of directors last week, including Meg Whitman, former CEO of eBay, Hewlett-Packard, and Spring-based HPE.

Fervo reported a net loss of $70.5 million for the 2025 fiscal year in the S-1 filing and a loss of $41.1 million in 2024.

Tracxn.com estimates that Fervo has raised $1.12 billion over 12 funding rounds. The company was founded in 2017 by Latimer and CTO Jack Norbeck.

Houston lawmaker may kill data center tax breaks due to $8B revenue loss

looking at the data

An influential Houston-area state senator is raising concerns about potentially billions of dollars in lost state revenue from tax breaks for Texas data centers—and is pondering legislation that would abolish the tax incentives.

Citing data from the state comptroller’s office, The Texas Tribune reports the state stands to lose nearly $8 billion in revenue from 2026 to 2030 due to sales tax and use tax exemptions for data centers. During the state’s 2025 fiscal year, which ended on Aug. 31, these tax exemptions caused Texas to lose a little over $1 billion, up from an earlier estimate of $130 million.

“These new numbers are extremely concerning, and I will say they’re unsustainable,” Republican state Sen. Joan Huffman, chairwoman of the state Senate Finance Committee, tells The Texas Tribune. “I plan to look at filing legislation to either repeal the exemption or take a very close look at it and see.”

Texas on track to be No. 1 data center market in U.S.

Scrutiny of the tax breaks comes amid an explosion of data center development in Texas, where data provider Aterio identifies nearly 1,000 centers that are operating, under construction or planned.

A report issued in January by Bloom Energy says the state is poised to become the No. 1 U.S. market for data centers within three years. By 2028, according to the report, Texas is projected to exceed 40 gigawatts of data center capacity—representing nearly 30 percent of total U.S. demand.

Among companies benefiting from the data center boom are:

  • Tech titans like Apple, Google, Meta Platforms, and Microsoft, which are spending billions of dollars to build data centers in Texas.
  • Spring-based ExxonMobil and Houston-based Chevron, two oil and energy giants that are developing natural gas plants to supply power for data centers.
  • Houston-based energy technology company Baker Hughes, which is collaborating with Google Cloud to develop AI-enabled power optimization and sustainability software for data centers.
  • DataBank, Data Foundry, Equinix, Digital Realty, Lumen Technologies, and IBM, all of which operate data centers in the Houston area.

The Texas Legislature will begin debating tax breaks for data centers in July, when Huffman’s Senate Finance Committee meets for an interim hearing before the 2027 legislative session, according to the Tribune.

Data center industry defends tax breaks

Leaders in the data center industry warn that watering down or halting the tax breaks could slow down or even end Texas’ ascent in the data center sector.

A 2025 report commissioned by the Data Center Coalition found that in 2024, data centers provided more than $1.6 billion in state tax revenue and almost $1.6 billion in local tax revenue in Texas. Over the next several years, according to the report, planned development of data centers in the Lone Star State could generate almost $3.8 billion in state tax revenue and more than $4.9 billion in local tax revenue.

In 2024, the Houston area had 8.1 million gross square feet of data centers, with the properties’ real estate investments sitting at $10 billion, according to the report. That year, data centers in the region produced a little over $700 million in state and local tax revenue. About 60 data centers operate in the Houston area.

Watchdog group warns of tax breaks’ danger to state budgets

On the other side of the debate over tax breaks for data centers, a report released last year by Good Jobs First, a nonprofit, nonpartisan watchdog group that tracks economic development incentives, decries the tax breaks as dangerous to state budgets.

“We know of no other form of state spending that is so out of control. Therefore, we recommend that states cancel their data center tax exemptions,” says Good Jobs research analyst Kasia Tarczynska, co-author of the report. “Shy of that, states should amend … legislation to cap how much any facility and company can avoid paying in taxes each year.”

Helix Earth closes $12M round and more Houston energy headlines

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Editor's note: The top energy transition headlines for the month include Helix Earth's Seed 2 funding and Chevron's plans for a West Texas power plant. Below are the five most-read EnergyCapital stories published April 1-15, 2026:

1. Houston cleantech company closes $12M seed round

Helix Earth is developing a retrofit technology that has the potential to cut HVAC energy use by up to 50 percent. Photo via Getty Images

Houston-based Helix Earth Technologies has closed a $12 million Seed 2 funding round to scale manufacturing of its energy-efficient commercial HVAC add-on technology. Veriten, a Houston-based energy investment firm, led the round. Rua Ventures, Carnrite Ventures, Skywriter LLC and Textbook Ventures also participated. Continue reading.

2. Chevron eyes $7B Texas power plant for Microsoft data center campus

Chevron is in talks with Microsoft and Engine No. 1 about a massive natural gas power plant in Texas. Photo via Getty Images

Software giant Microsoft is negotiating exclusively with Houston-based oil and gas titan Chevron and investment firm Engine No. 1 about the development of a $7 billion power plant in West Texas that would supply electricity for a Microsoft data center campus. Continue reading.

3. 3 strategies to strengthen the Gulf Coast as a global energy hub

The Gulf Coast is one of the most critical energy hubs in the world. Photo via Getty Images.

The Texas-Louisiana Gulf Coast is the backbone of America’s energy and chemical economy. Texas produces roughly 43% of U.S. crude oil and 28% of natural gas, while Texas and Louisiana together account for about half of the nation’s refining capacity, processing 9.3 million barrels of crude per day across 50 refineries. The region also produces approximately 80% of the nation’s primary petrochemicals and ships more than $117 billion in chemical products annually from Texas alone. Continue reading.

4. 8 CERAWeek 2026 takeaways from a new Houston energy leader

Kelsey Kearns (right), the new director of Greentown Houston, shared her takeaways from her first-ever CERAWeek with Energy Capital HTX. Photo courtesy Greentown

My first CERAWeek was a blur. Having top energy executives, policymakers, and technologists all gathered in Houston—over 11,000 of them this year—was both overwhelming and energizing. The theme was “Convergence and Competition: Energy, Technology, and Geopolitics,” and walking through the George R. Brown Convention Center, it was immediately clear that this was no ordinary industry conference. As a first-timer with a Greentown Labs lens, here’s what really stuck with me. Continue reading.

5. Greentown Labs names new COO, appoints new Head of Houston

Lawson Gow and Kelsey Kearns have stepped into new leadership roles at Greentown Labs. Photos courtesy Greentown/LinkedIn

Greentown Labs has reshuffled its leadership, elevating Houston leaders into new roles. Lawson Gow was named COO of the Houston- and Boston-based climatech incubator in February 2026. In his new role, he will focus on optimizing Greentown's structure, building new internal and external systems and developing a plan for growth. Continue reading.

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