Tesla is bleeding billions, Musk is feuding with politicians, and the long-promised “cheap” EV is finally here—but is it too little, too late?
After years of dominance in the electric vehicle market, Tesla is now grappling with a perfect storm—sliding sales, waning investor confidence, political backlash, and surging competition. Elon Musk's carmaker is promising a reinvention, including cheaper models and a European self-driving rollout, but questions remain about whether these efforts will be enough to rescue the brand.
Tesla Sales and Profit Fall Sharply
According to a BBC News report, Tesla's sales dropped by 12% in Q2 2025 to $22.4 billion—its steepest year-over-year fall in over a decade. Car deliveries tumbled 14%, and net income shrank 16% to $1.1 billion. Profit margins, once a Tesla hallmark, have narrowed in five of the past six quarters. Chief Financial Officer Vaibhav Taneja cited the loss of a U.S. EV tax credit and rising tariffs as key pressures, with $300 million lost due to U.S. trade policy alone.
A Cheaper Tesla: Long-Promised, Finally Emerging
Tesla confirmed it began initial builds of a more affordable model in June, with mass production targeted for later this year. As detailed by Electrek, this vehicle is not the long-rumored sub-$25,000 model but a simplified variant of the existing Model 3/Y line. It’s designed to cut costs while sharing production lines, allowing quicker rollout but possibly disappointing consumers who expected a revolutionary platform.
Autonomy is the “Stratospheric” Bet
Elon Musk stressed on the latest earnings call that “autonomy is the story”—arguing that Tesla’s long-term value depends on successfully deploying its Full Self-Driving (FSD) software. He predicted Europe would greenlight the system this year, starting in the Netherlands. Yet, regulatory hurdles remain immense. As MLex notes, approval hinges on EU adaptation of automated driving laws, with current frameworks limiting rollout beyond Level 2 autonomy.
Tesla CEO Elon Musk addresses reporters from the Oval Office amid rising scrutiny over his political involvement and its impact on the company.
Tesla’s Identity Crisis: Political Baggage and Investor Doubt
Musk’s vocal political activities, including his support for Donald Trump and recent clashes over federal EV policies, have rattled parts of Tesla’s investor base. As AP News reports, some shareholders are now questioning whether his political ambitions are “compatible” with his CEO duties. This follows a messy split with Trump and Musk’s criticism of a tax and spending bill he called “utterly insane.”
Competition: The Market Has Caught Up
Once unrivaled in electric innovation, Tesla is now losing ground to aggressive Chinese automakers and legacy brands like VW, BMW, and Hyundai. According to Wired, Tesla’s Model Y refresh underperformed in major markets, and its European market share has fallen to just 1.6%. Meanwhile, rivals are launching lower-cost EVs with better interiors and more advanced driver assist systems, often tailored for local markets.
Former Execs Sound the Alarm
Former Tesla executive Peter Bardenfelth-Hansen told the BBC that Tesla’s growth was long propped up by selling emissions tax credits to other automakers—pure profit with no manufacturing cost. Now that this stream is drying up, the company is exposed. As The Times highlights, Bardenfelth-Hansen expressed frustration over the continued delay of Tesla's long-promised affordable vehicle, referencing Musk's original "master plan" from 2006. “We’re still sitting at the tip of our chairs,” he said.
People Also Ask (FAQs)
When will Tesla launch its cheaper EV?
Tesla stated it began first builds of a cheaper model in June 2025, with plans to scale production in the second half of the year. The car is a simplified Model 3/Y variant, not a new $25,000 EV platform.
Is Full Self-Driving legal in Europe yet?
Not yet. Tesla expects approval to begin in the Netherlands in late 2025, but broader EU certification faces regulatory delays due to current UN frameworks on automated driving.
How much has Elon Musk’s politics affected Tesla?
Musk’s vocal political opinions, including support for Donald Trump and criticism of government spending, have triggered backlash among investors and consumers. Several have publicly questioned his fitness to continue leading the company.
Can Tesla survive the growing EV competition?
Tesla still leads in U.S. EV sales, but its global dominance is eroding. Chinese automakers, in particular, are offering better value EVs at lower prices, and legacy firms are closing the tech gap rapidly.
Final Thoughts - A Little Too Late
As Tesla scrambles to deliver on its long-delayed promises—from cheaper cars to robotaxis—the pressure is building. The brand that once defined the EV revolution now faces an identity crisis. Whether it leads the next era or fades into the rearview will depend on what happens next.
Stay tuned for real-time updates, expert insight, and deep dives into Tesla’s next moves. This story is just getting started.
