Musk wants to go all out against Lei Jun and Li Xiang.

On July 24, Tesla released its Q2 financial report for 2025: revenue reached $22.5 billion, a year-on-year decline of 12%; net profit was $1.172 billion, a shrinkage of 16%; global deliveries were 384,000 vehicles, a sharp drop of 13.5%. This is Tesla's second consecutive quarter of double-digit decline and the most severe delivery contraction in a decade.

After the release of the financial report, the after-hours stock price plummeted by more than 8%. Behind the market's negative reaction is the pessimistic warning revealed in the financial report data: "Buckle up, the next few quarters could be tough."

Facing this less-than-ideal financial report, Tesla CEO Elon Musk still painted a big picture for investors during the earnings conference call. He said that Tesla is actively promoting several potential projects, and the most eye-catching one is the progress of a "more affordable model".

However, according to Musk's description, investors soon found that this "more affordable model", which has attracted wide attention from the outside world, is actually a new version of the Model Y. It began preliminary production in the United States in June this year and is expected to be mass-produced on a large scale in the second half of the year. According to the plan, this model will further expand Tesla's share in the global automotive market with its affordable price, especially in the highly competitive mid - and low - end markets.

In addition to this "more affordable model", Musk also mentioned Tesla's progress in areas such as Robotaxi (autonomous taxi), the humanoid robot Optimus, and unsupervised FSD (Full Self - Driving). He emphasized that these projects will become important drivers of Tesla's future growth. Although they currently face many challenges, the prospects are very promising.

However, the market has reacted coldly to the blueprint painted by Musk. After all, in the past few years, Tesla has been somewhat lackluster in automotive technology innovation and business expansion, while still facing many real problems, such as slowing sales growth, declining profitability, and increasing competitive pressure. Against this background, investors hope to see Tesla come up with practical solutions to reverse the current unfavorable situation.

After all, this strategy of "hedging the present with the future" easily reminds people of the situation four years ago when Tesla heavily promoted the stainless - steel prototype vehicle at the Cybertruck launch event. Whether the promised benefits can be realized is now hanging in the balance.

A

Looking through Tesla's Q2 financial report, almost every core indicator is declining. The revenue from the automotive business was $16.66 billion, a year - on - year shrinkage of 16%, which became the main drag on the total revenue. The revenue from the energy storage business, which was once highly anticipated, was $2.79 billion, also showing a rare decline of 7%. What's more severe is the cash flow - the free cash flow was only $146 million, a year - on - year evaporation of 89%, and 81% lower than the market expectation.

"It's like trying to draw water with a leaky bucket," said Wang Min, an automotive analyst at a securities company in Shanghai. "All promotional means have been exhausted. Zero - interest loans and free FSD trials can no longer stimulate demand."

There are two factors contributing to the sales decline. In North America, the "Big and Beautiful Act" strongly promoted by Trump threatens to cancel the $7,500 electric vehicle tax credit, directly hitting the price competitiveness of entry - level models such as the Model 3. In China, its largest overseas market, Tesla's retail sales in the first half of the year were 263,000 vehicles, a year - on - year decline of 5.4%, making it the only brand among the top ten new - energy vehicle brands with a decline in sales. What worries the management even more is the cooling of the "carbon credit" business - the revenue from this item in this quarter was only $439 million, a year - on - year halving of 51%. If this part of the revenue is excluded, Tesla was actually on the verge of loss in Q2.

The only bright spot is the gross profit margin. The figure of 17.2% is higher than the market expectation of 16.5%, mainly due to the reduction in battery raw material prices and cost control at the Shanghai factory.

However, this fails to cover up the pain of strategic transformation. "Tesla's valuation logic is being re - constructed," said Chen Chao, a senior automotive industry analyst, to Zimubang (ID: wujicaijing). "In the past, the P/E ratio was calculated based on electric vehicle sales. Now, investors are more concerned about the FSD subscription rate, Robotaxi mileage, and Dojo chip computing power."

However, this change explains why Cathie Wood, the well - known Wall Street fund manager, increased her position in Tesla against the trend. In the past three weeks, her ARK fund has bought Tesla stocks seven times in a row, betting that the AI narrative will eventually come true.

B

"Consumers don't not want Tesla cars; they just can't afford them!" Musk's words during the conference call revealed the strategic card of the affordable model.

This so - called new car, internally known as "E80", is actually a simplified version of the current Model Y: reducing the battery capacity, using low - cost interiors, and canceling some intelligent hardware. The goal is to bring the starting price to the range of 150,000 - 170,000 RMB.

Choosing the Model Y instead of a new platform exposes Tesla's urgency. At the beginning of 2024, the project of a $25,000 model codenamed NV91 was reported to have been aborted. Now, the simplified Model Y seems more like a second - best emergency plan.

Lars Moravy, Tesla's vice - president of engineering, admitted: "The production capacity of the new model will only start to increase by the end of the year." This time point has a hidden meaning - the U.S. electric vehicle tax credit may be cancelled at the end of September. Tesla needs to clear its inventory first and then launch the affordable car.

The Chinese market has become a key battleground. In the first half of the year, the sales of the Model Y in China plummeted by 17.5% year - on - year. Competitors such as the Xiaomi YU7 and the LeDao L90 are eroding its market share with higher configurations and lower prices.

Currently, the general view in the industry is that Tesla's product matrix is too thin. It has relied on only two main models, the Model 3 and the Model Y, for four years. In the same period, BYD launched 12 new models, and Li Auto iterated its extended - range platform three times.

To reverse the decline, Tesla is taking a two - pronged approach:

Firstly, targeting the mass market: The E80 aims at family users and competes directly with the Xiaomi YU7 for first - time buyers.

Secondly, targeting the high - end market: The six - seat SUV Model Y L will be launched in the autumn, priced at 400,000 RMB, entering the market segment of the Li L9.

The application information of the latter shows that the vehicle length has been extended to 4,976 mm, and the wheelbase has reached 3,040 mm, 150 mm more than the current Model Y, directly solving the long - criticized problem of the "back - row small bench" in the current model.

Interestingly, Li Xiang, the CEO of Li Auto, immediately posted on Weibo, saying: "Welcome to pay attention to our five - seat car, the i6!" Li Bin of NIO also took the opportunity to promote the LeDao L90. This rare interaction implies that new - energy vehicle manufacturers have brought the battle to Tesla's last stronghold - the high - end pure - electric SUV market.

C

If we start counting from the delivery of the Cybertruck in 2021, Tesla has not launched a new model for four years.

In contrast, during the same period, products such as the BYD Seal, the Zeekr 001, and the Wenjie M9 have completed two rounds of iterations. "Musk has scattered his innovation energy on Twitter and rockets," said Zhang Yuchen, an independent automotive analyst, somewhat sarcastically. While Chinese automakers are competing in areas such as 800V ultra - fast charging and urban NOA, Tesla's model updates are limited to increasing battery range and changing wheels.

This stagnation was already warned in the financial report. In 2024, Tesla's global deliveries decreased by 1.1% year - on - year, the first negative growth in a decade. In the first half of 2025, the decline widened to 13.3%.

Especially in Europe, Volkswagen overtook Tesla to the fifth place with a market share of 28.1%, and Audi also overtook Tesla.

No wonder Musk is pinning high hopes on the "new car", the E80.

However, an industry observer close to Tesla is very pessimistic about the prospects of the E80: "This is not innovation but a desperate attempt to survive. At least in the Chinese market, it's a bit risky."

Because, after the price cut, the E80 will fall into the most competitive price range in the Chinese auto market: in the 150,000 - 170,000 RMB range, there are 12 "local champions" such as the BYD Song PLUS DM - i, the XPeng G6, and the Leapmotor C11, which sell more than 10,000 units per month, and they have built a three - layer defense line.

Firstly, in terms of configuration: the Zeekr 7X at the same price comes standard with 5C ultra - fast charging (charging 241 km in 5 minutes) + a lidar, while the E80 only supports 3C charging, and its intelligent driving hardware remains at the HW3.0 level.

Secondly, in terms of local experience: Huawei's ADS 3.0 has launched map - less intelligent driving in 400 cities across the country, and XPeng's XNGP can learn the user's commuting routes. However, Tesla's FSD does not even cover the Shanghai elevated roads.

Finally, in terms of hidden costs: currently, the annual insurance cost of the Model Y is 18% higher than that of its competitors, the maintenance cycle is 5 days longer, and the used - car depreciation rate is 10 percentage points higher. The same can be inferred for the E80.

On the other hand, Tesla's brand halo in the sinking market seems to be fading. The owner of an auto trading center in a third - tier city in Henan found that "now young people come in and ask if there are cars like Xiaomi's. The Tesla brand is not as appealing as it was three years ago."

This change in perception is directly reflected in the data: since 2024, the user attention to Xiaomi cars has exceeded that of Tesla, and the gap has been continuously widening.

"Tesla is experiencing the classic pain of a luxury brand going mainstream," said Zhao Fuquan, the dean of the Automotive Industry Strategy Research Institute at Tsinghua University. When the annual sales target of the E80 is set at 500,000 vehicles (accounting for 35% of Tesla's global sales), its user profile has shifted from "high - income tech elites with an annual salary of one million" to "ordinary workers with a monthly salary of 8,000".

This change is tearing at the brand value. There was news that the property management of a high - end residential area recently refused to allow the Model Y to enter the basement parking lot, citing the reason of "fear of lowering the property's grade".

And bulk purchase orders from ride - hailing companies (accounting for 15% of the estimated sales of the E80) may further weaken its consumer - oriented nature.

D

Looking back at Tesla's product history, we can find a dangerous cycle: There is always a long gap after each popular model. There was a five - year gap between the Model S (2012) and the Model 3 (2017), and a two - year gap between the Model 3 and the Model Y (2019). After the Model Y, there has been no new mass - produced model for six years.

This gap is being exploited by competitors. BYD's e - platform 3.0 can achieve a 300 - km range with a five - minute charge, and the power density of Huawei's DriveONE electric drive system is 27% higher than that of Tesla.

Even Tesla's "inherent advantage" in cost control is being challenged. After adopting the integrated die - casting rear floor, the number of parts in the Xiaomi SU7 has been reduced by 40%, and the working hours have been shortened by 38%, outperforming Tesla's Shanghai factory in terms of efficiency.

Analyst Chen Chao believes that considering the production capacity ramp - up speed and the competitive situation, the sales prospects of the E80 may follow three possible paths:

Firstly, short - term boost (Q4 2025 - Q2 2026): Relying on the remaining brand influence, the sales in the first year are expected to reach 250,000 - 350,000 vehicles, driving Tesla's global market share back up to 12%. However, the cost is also high: the gross profit per vehicle may drop to 16% (compared to 22% for the current model), and the profit margin of the automotive business will be compressed to a dangerous level.

Secondly, mid - term stalemate (after Q3 2026): As the Li L6 (starting at 259,800 RMB) and the BYD Sea Lion 07 enter the 200,000 - RMB market segment, the configuration disadvantages of the E80 will be magnified. According to the calculation of Oliver Wyman, its market share will drop back to 8% by the end of 2026, close to the lowest level of the current model.

Thirdly, long - term dilemma (after 2027): If strategic milestones such as the localization of FSD and the mass production of 4680 batteries are delayed, Tesla may completely become "the Volkswagen of the electric era" - still