Key Takeaways:
- Tesla faces growing competition from BYD, with sales declining as BYD gains ground.
- Political backlash and vandalized stores threaten Tesla’s brand and sales.
- Lack of new models and delays in innovation hurt Tesla’s market share.
- Full self-driving tech could be Tesla’s salvation, but challenges remain.
- Elon Musk’s political ties and absence from operations raise investor concerns.
Gone are the days when Tesla was the undisputed leader in electric vehicles. The company, led by Elon Musk, is now facing serious challenges that have sent its stock price tumbling. From rising competition to political controversies, here’s what’s going wrong for Tesla and how it might recover.
1. BYD Is Closing In Fast
Tesla’s dominance in electric vehicle sales is fading fast. BYD, a Chinese automaker, is now right behind Tesla. In 2024, BYD sold 1.76 million vehicles, a 12% increase from the previous year. Meanwhile, Tesla sold 1.79 million vehicles, a 1% drop. When hybrid vehicles are included, BYD even broke past Tesla in revenue, making $107.2 billion compared to Tesla’s $97.7 billion.
Analysts warn that Tesla’s sales could fall further. Garrett Nelson, an expert at CFRA Research, said Tesla’s initial forecast of a 20-30% sales increase in 2025 is now being scaled back. “We’re looking at a 5% decline, but it could be much worse,” he said.
2. Political Firestorms Are Hurting Tesla
Elon Musk’s close ties to former President Donald Trump and his support for far-right politicians in Europe have sparked outrage. In the European Union, Tesla’s registrations plummeted 49% in the first two months of 2025. Protests have erupted, with demonstrators accusing Musk of supporting fascism. Signs like “Tesla finances fascism” have appeared, urging people to boycott Tesla cars.
In Germany, Musk faced criticism for backing the far-right Alternative for Germany (AfD) party. An arson attack in March 2024 even halted production at Tesla’s German plant.
Garrett Nelson said, “The biggest concern now is regarding the brand value. Picking a side, Republican or Democrat, can really do a lot of damage.” Tesla’s stock has lost nearly a third of its value since the start of the year.
3. Lack of New Models Is Costing Tesla
Tesla hasn’t released many new models since the Model Y in 2020. This lack of innovation has allowed BYD to gain ground, especially in China. The Cybertruck, Tesla’s latest release, has been a letdown. After years of delays, the truck finally arrived in late 2023 but has faced multiple recalls. In March 2024, all 46,096 Cybertrucks on the road were recalled because their body panels could come loose.
Tesla’s long-awaited low-cost model is still nowhere in sight, leaving the company with an outdated lineup. “Lack of innovation, lack of new models,” said Nelson, explaining why Tesla is losing market share to BYD.
4. Full Self-Driving Could Save the Day
Despite these challenges, Tesla has one ace up its sleeve: its Full Self-Driving (FSD) technology. Nelson called it a “major advantage” with a “huge market opportunity” worth $5 trillion globally. Tesla is ahead of competitors like Google’s Waymo, which has been testing robotaxis since 2010.
However, Tesla’s Cybercab, its answer to Waymo, is still months away from starting road tests in Austin, Texas. The Trump administration is also working on new regulations for autonomous driving, which could help Tesla given its lead in the US market.
5. Musk’s Focus Is Divided
Elon Musk’s deep involvement in politics has raised concerns among investors. “He’s spending most of his time in Washington, D.C., right now,” said Nelson. “He’s less focused on the day-to-day of what’s happening operationally at such a critical time in Tesla’s history.”
To reassure investors, Nelson suggested appointing a senior executive to handle daily operations while Musk focuses on politics. Tesla’s loyal shareholders are sticking by the company, but they need reasons to stay confident.
A Rocky Road Ahead
Tesla’s journey isn’t getting smoother anytime soon. With BYD biting at its heels, political backlash, and a lack of new models, the company faces an uphill battle. However, its Full Self-Driving tech and loyal customer base offer hope for recovery.
Will Tesla regain its pole position, or will BYD take the lead? Only time will tell. One thing is certain: Tesla needs to innovate, distance itself from politics, and focus on what made it great in the first place — building cutting-edge electric vehicles.