China’s BYD is set to overtake Elon Musk’s Tesla as the world’s biggest seller of electric vehicles (EVs), marking the first time it has outpaced its American rival for annual sales.

On Thursday, BYD said that sales of its battery-powered cars rose last year by almost 28% to more than 2.25 million.

Tesla, which is due to reveal its total sales for 2025 later on Friday, last week published analyst’s estimates suggesting that it had sold around 1.65 million vehicles for the year as a whole.

The US firm has faced a tough year with a mixed reception to new offerings, unease over Musk’s political activities and intensifying competition from Chinese rivals.

In October, Tesla introduced lower-priced versions of its two best-selling models in the US in a bid to boost sales. It had faced criticism that it had been slow to release new and more affordable options to stay competitive.

Musk, who is already the world’s richest man, is tasked with significantly boosting Tesla’s sales and stock market value over the next decade to secure a record-breaking pay package. The deal, which was approved by shareholders in November, could see him getting a payout of as much as $1tn (£740bn).

Musk is overseeing a slew of ventures besides Tesla, including the social media platform X, the rocket firm SpaceX and the Boring Company tunnelling business.

Shenzhen-based BYD has grown in recent years to become a global EV powerhouse as its prices often undercut rival carmakers.

Its rapid expansion – especially in Latin America, South East Asia and parts of Europe – comes despite many countries imposing steep tariffs on Chinese EVs.

In October, BYD said the UK had become its biggest market outside China. The firm said that its sales in Britain surged by 880% in the year to the end of September, driven by strong demand for the plug-in hybrid version of its Seal U sports utility vehicle (SUV).