Jan 6 - By Nick Carey, European Autos Correspondent Greetings from London! And a happy new year - I hope you are rested up and ready to go in 2026, which is likely to be another hectic year for an auto industry facing its greatest upheaval in a century. Not to mention uncertainty. I mean, how many people anticipated 2026 would start with a U.S. government raid to capture the president of Venezuela? U.S. President Donald Trump remains unpredictable. Could we see further protectionist measures such as tariffs in his home market? What is certain for this year is that outside the U.S. market, traditional automakers will face increasing competition from Chinese rivals in China, Europe and emerging markets. Traditional automakers know they are on their back foot, but they are racing to get back in the game with new, more affordable EVs. Which brings us to today’s Auto File…
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<li>Tesla loses EV sales crown</li>
<li>Self-driving cars back at CES</li>
<li>U.S. car sales defy expectations</li>
</ul>
Tesla dethroned Tesla’s bad year in 2025, above all in Europe, made it all but inevitable that it would lose its title of world’s largest EV maker to China’s BYD. But it is a sobering moment nonetheless and highlights the rapidity of change now in an industry that moved in small increments for much of the last century. Under Elon Musk, Tesla came from nowhere to become the global EV leader in just the last decade. But the company has not launched a new mass-market model since the Model Y in 2020. According to research firm GlobalData, 97% of Tesla’s sales in 2025 came from just two models – the Model Y and Model 3. Tesla’s sales fell close to 9% in 2025, but Musk is far more interested in pursuing self-driving technology and other futuristic ideas than developing new vehicles – a high-risk, high-reward strategy unheard of in an industry whose sole focus has always been on selling more cars. In the meantime, BYD has come from nowhere in the last six years to become the world’s No. 7 automaker in 2024 (we’re still waiting on its ranking for 2025). Despite its weakest sales growth in five years in China, BYD’s sales of fully electric cars rose 28% in 2025 and the company is in the midst of an aggressive overseas expansion to fuel future growth. In the short term at least, it doesn’t look like anyone else will come close to taking BYD’s newly won crown. Recommended reading:
<ul>
<li>Venezuela’s paralyzed oil exports</li>
<li>EU-fueled platinum rally</li>
<li>Mexico’s China tariffs take effect</li>
</ul>
Hello again, self-driving cars After a couple of tough years for the self-driving car industry, autonomous vehicles are back in vogue with investors and thus popular once again at this year’s CES trade show in Las Vegas. Major hype towards the end of the last decade that fully self-driving cars were just around the corner drew tens of billions of dollars into autonomous vehicle startups. However, developing cars that could match the responsiveness of human drivers proved far more costly and time-consuming than expected and some major automakers including Ford and General Motors have pulled the plug on their self-driving units. But as Reuters colleague Abhirup Roy reports, this time round investors are back and betting that artificial intelligence will invigorate an industry beset by slow progress, high costs, safety incidents and regulatory scrutiny. You can read all about it here. While automakers in the U.S. market have hit the brakes on EV plans, a slew of auto suppliers and startups will show off their latest autonomous vehicle hardware and software at CES. Among the announcements so far, Mercedes-Benz says it will launch a new advanced driver-assistance system this year allowing autonomous driving on U.S. city streets under driver supervision and self-driving truck firm Kodiak AI  has partnered with Bosch to ramp up manufacturing autonomous trucking hardware and sensors as it moves towards large-scale commercial rollout.
U.S. car sales shrug off tariffs U.S. new car sales rose about 2% in 2025, defying expectations in particular that Trump’s tariffs would lead to higher prices and a slump for the industry. But automakers proved reluctant in the hyper-competitive U.S. car market to raise prices, opting to eat the extra cost for now. As Reuters colleagues Nora Eckert and Kalea Hall report, automakers also confronted supply-chain snarls and the removal of a $7,500 electric-vehicle tax credit, factors that drove some buyers to dealer lots to snatch up vehicles before regulations pushed prices higher. You can read all about it here. Analysts warn that sustaining this growth in 2026 may prove difficult as economic uncertainty and tariff-related costs weigh on consumers. Affordability also remains a major issue in the U.S. market, where the average transaction price for a new car hit a whopping $47,104 in December.
Norway EV sales hit 96% While EV sales have struggled in parts of Europe – contributing to the EU’s decision last month to drop an effective 2035 ban on fossil-fuel car sales – Norway has relied heavily on its oil wealth to fund a transition that is nearing completion. As Reuters colleague Marie Mannes reports, fully-electric cars made up 96% of new car sales in Norway last year, up from 89% in 2024. You can read about it here. Norway announced in October that it would add up to $5,000 in value-added tax per vehicle from January 1, 2026, sparking a rush among buyers and car firms to beat the 2025 year-end deadline. The country has been a lone bright spot in Europe for Tesla, which remained Norway’s top-selling car brand for the fifth consecutive year.
Fast Laps A Dutch court on January 14 will hear arguments over whether it should formally investigate alleged mismanagement at computer chip maker Nexperia.
Hyundai and affiliate Kia aim to grow their combined global vehicle sales by 3.2% to 7.51 million vehicles in 2026, after narrowly missing their sales targets in 2025.
Honda will extend a production halt at three car plants in China by two weeks due to a semiconductor shortage, highlighting persistent supply chain strains for Japan’s second-biggest automaker.
Rivian reported 2025 EV deliveries that fell more than expected, underscoring the pressure on demand for higher-priced EVs as it prepares to start delivering a lower-cost model in the first half of 2026.
Sony Honda Mobility unveiled a prototype EV at CES and CEO Yasuhide Mizuno said the joint venture between Sony and Honda aims to deliver a new model based on the Afeela prototype to U.S. customers as early as 2028.
Hyundai plans to deploy humanoid robots at its U.S. manufacturing plant in Georgia starting in 2028, marking a step toward automating higher-risk and repetitive manufacturing tasks. Think your friend or colleague should know about us? Forward this newsletter to them. They can also subscribe here.
(Editing by Alexandra Hudson)

BYD has overtaken Tesla as the world's largest EV maker, marking a significant shift in the auto industry. Tesla's sales fell nearly 9% in 2025, primarily due to a lack of new models, while BYD's electric car sales grew by 28%. The competition is intensifying as traditional automakers strive to launch more affordable EVs amidst increasing pressure from Chinese rivals. Meanwhile, the self-driving car sector is regaining investor interest, with new advancements showcased at CES. Despite tariffs and economic uncertainty, U.S. car sales rose by 2% in 2025, defying expectations.

- The auto industry faces significant change in 2026, with increasing competition from Chinese firms like BYD, which recently surpassed Tesla in global EV sales.  
- Tesla's sales fell nearly 9% in 2025, primarily relying on outdated models, while self-driving technology attracts renewed investor interest amid setbacks in the autonomous vehicle market.  
- Despite Trump's tariffs, U.S. car sales rose 2% in 2025, but sustaining growth in 2026 may be challenging due to economic uncertainty and high vehicle prices.

Auto File: BYD nabs Tesla’s crown