Tesla

Decline in sales comes amid outrage of Elon Musk’s political forays, end in US electric vehicle tax breaks.

Tesla has lost its place as the top global seller of electric vehicles to Chinese company BYD, capping a year defined by outrage over CEO Elon Musk’s political manoeuvring and the end of United States tax breaks for customers.

The company revealed on Friday that it had sold 1.64 million vehicles in 2025, compared with BYD’s 2.26 million vehicles. The sales represented a 9 percent decline for Tesla from a year earlier.

Tesla, founded in 2003, had for years far outpaced traditional automakers in its development and sale of electric vehicles. However, the market has become increasingly crowded with competitors, with China’s electric vehicle market bounding ahead.

Musk’s embrace of US President Donald Trump in 2024 and subsequent spearheading of a controversial “government efficiency” panel (DOGE) behind widespread layoffs of federal workers has also proved polarising. The political foray prompted protests at Tesla facilities and slumps in sales.

The company’s fourth quarter sales totaled 418,227, falling short of the much-reduced 440,000 target that analysts recently polled by FactSet, an investment research firm, had expected.

Musk left DOGE in May, in what was largely viewed as an effort to reassure investors.

Tesla was also hard hit 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. Trump’s opposition to electric vehicles has contributed to a strained relationship with Musk.

Despite the downward trends in sales, investors have generally remained optimistic about Tesla and Musk’s ambitious plans to make the company a leader in driverless robotaxi services and humanoid robots for homes.

Reflecting that optimism, Tesla stock finished 2025 up about 11 percent.

Tesla has also recently introduced two less expensive electric vehicle models, the Model Y and Model 3, meant to compete with cheaper Chinese models for sale in Europe and Asia.

Musk entered 2026 as the wealthiest person in the world.

It is widely believed that the public offering of his rocket company, SpaceX, set for later this year, could make the 54-year-old the world’s first trillionaire.

In November, Tesla’s directors awarded Musk a potentially historic pay package of nearly $1 trillion if ambitious performance targets were met.

Musk scored another huge win in December,when the Delaware Supreme Court reversed a lower court’s ruling, awarding him a $55bn pay package that had been paused since 2018.

Conversely, Tesla is at risk of temporarily losing its licence to sell cars in California after a judge there ruled it had misled customers about the safety of its driverless taxis.

The Delaware Supreme Court rules in favour of Musk and his $56bn compensation package.

Elon Musk’s 2018 pay package from Tesla, once worth $56bn, has been restored by the Delaware Supreme Court, in the United States, two years after a lower court struck down the compensation deal as “unfathomable”.

Friday’s ruling overturns a decision that had prompted a furious backlash from Musk and damaged Delaware’s business-friendly reputation.

The pay package was by far the largest ever, until Tesla shareholders approved a new, even larger pay plan of nearly $1 trillion in November.

The ruling means that Musk can finally get paid for his work since 2018, when he transformed Tesla from a struggling startup to one of the world’s most valuable companies.

The 2018 pay deal provided Musk options to acquire about 304 million Tesla shares at a deeply discounted price if the company hit various milestones, which it did.

Tesla estimated in 2018 that the plan was potentially worth $56bn, although given the rise in the stock price, the value ballooned to about $120bn by early November. The options represent approximately 9 percent of Tesla’s outstanding stock.

Musk never collected his stock options because, soon after shareholders approved the 2018 compensation, the board was sued by Richard Tornetta, an investor with just nine Tesla shares.

In 2024, after a five-day trial, Delaware Judge Kathaleen McCormick concluded that Tesla’s directors were conflicted and key facts were hidden from shareholders when they voted to approve the plan. She ordered that the 2018 plan be rescinded.

Musk accused Delaware judges of being activists, hostile to tech founders, and he urged businesses to follow Tesla and reincorporate elsewhere.

Dropbox, Roblox, The Trade Desk and Coinbase were among the handful of large companies that moved their legal homes to Nevada or Texas. However, Delaware remains by far the most popular legal home for US public companies.

Tesla’s board has warned that Musk, the world’s richest person who also leads the SpaceX rocket venture and the artificial intelligence startup xAI, could leave the electric car company if he does not get the pay he wants and an increase in his voting power.

In November, shareholders approved a new pay package that could be worth $878bn if Tesla meets targets for self-driving vehicles, a robotaxi network and sales of humanoid robots.

Tesla has taken steps to reduce the risk that a shareholder could tie up the 2025 package in the courts.

The Austin-based company is now incorporated in Texas, which allows Tesla to require that any investor or group of investors must own 3 percent of the company stock before suing for an alleged corporate law violation. A stake of that size would be worth about $30bn, and Musk is the only individual with that much stock.

Dec. 16 (UPI) — Tesla shares closed at a record-high $489.88 on Tuesday, days after CEO Elon Musk announced the company had been testing driverless vehicles in Texas.

Shares rose 3.1% for the day and were up 21% for the year, CNBC reported. This came after Tesla’s worst quarter since 2022 when it dropped 36% in the first quarter of this year.

Techstock² reported that in addition to the roboatxi announcement, Tesla saw a boost on the stock market in response to a fresh round of filings with the Securities Exchange Commission.

The filings showed that WT Wealth Management increased its Tesla stake by 178.7%, Carter Financial Group opened a new Tesla position, Orion Portfolion solutions increased its holdings of Tesla by 14.8%, National Wealth Management Group increased its stake by 26.3% and Momentum Wealth Planning purchased a new stake of 9,802 shares worth about $3.11 million.

Tesla also invested $1.2 billion in a battery cell plant in Berlin.

With Tuesday’s bounce, Tesla’s market cap reached $1.63 trillion, making it the seventh-most valuable company in trading behind Nvidia, Apple, Alphabet, Microsoft, Amazon and Meta, CNBC reported.

Tesla’s board of directors has earned more than $3 billion through stock awards since 2004, an amount that dwarfs compensation at other major U.S. technology firms. CEO Elon Musk’s brother Kimbal has earned nearly $1 billion, while director Ira Ehrenpreis collected $869 million and board chair Robyn Denholm $650 million. Most of these windfalls came from stock options that appreciated dramatically as Tesla’s share price soared.

Why It Matters
The outsized compensation raises questions about corporate governance and board independence. Experts argue that such high pay could compromise directors’ ability to objectively oversee Tesla and Musk, as a large portion of their wealth is tied to stock performance rather than cash. Critics also note that Tesla is one of the few major firms where directors are paid predominantly in options rather than shares, magnifying upside potential with limited downside risk.

Stock Option Controversy
Tesla directors have received compensation primarily through stock options, rather than shares. This practice allows them to profit if Tesla’s stock rises without incurring losses if it falls, unlike restricted stock which better aligns interests with shareholders. Between 2018 and 2024, Tesla directors averaged $1.7 million annually despite suspending pay for four years, more than double the average of Meta directors, the next highest-paid among the “Magnificent Seven” tech companies.

Legal and Governance Issues
Tesla’s board suspended new stock grants in 2021 following a shareholder lawsuit alleging excessive pay. The board has also faced scrutiny in a Delaware court over Musk’s 2018 compensation package, with the judge ruling that excessive pay and personal ties compromised CEO-pay negotiations. The board proposed a new pay package for Musk in 2024 potentially worth $1 trillion in Tesla stock over the next decade.

Stakeholders include Tesla’s board members, CEO Elon Musk, shareholders, corporate-governance experts, and the wider investment community. Oversight and accountability are central concerns, as compensation structures can influence board decisions and shareholder trust.

Comparison With Tech Peers
Other major tech firms like Alphabet, Meta, Apple, Microsoft, Amazon, and Nvidia (“Magnificent Seven”) have also seen stock-based wealth increases for directors, but none have granted awards as concentrated or directly tied to board service as Tesla. Lifetime earnings for Tesla directors far exceed peers when factoring in appreciated stock value.

What’s Next
Governance experts suggest reforms such as paying directors in restricted stock rather than options, and greater shareholder oversight of compensation plans. Tesla’s board must navigate the delicate balance of incentivising directors while maintaining independence in overseeing Musk and the company. Legal proceedings and shareholder scrutiny over Musk’s latest pay package are ongoing and may influence future board compensation practices.

Additional Considerations
The analysis raises broader questions about tech-sector governance, the risks of incentive structures tied to stock performance, and the potential misalignment between directors’ personal wealth and long-term shareholder interests. Tesla’s board, given its outsized compensation, will remain a focus for regulators and investors alike.

With information from an exclusive Reuters report.