Sales have plummeted. Is the "pie" painted by Musk still appealing?

Can Elon Musk, the "prodigal son who has turned over a new leaf", lead Tesla back on track?

Three months ago, Tesla released its "worst quarterly report ever" - both revenue and profit declined. The net profit was only $409 million, dropping to single digits for the first time in nearly five years. The global delivery volume decreased by 13% year-on-year to 336,700 vehicles, the lowest quarterly delivery volume since the second quarter of 2022.

After that, Musk gradually withdrew from the political arena. After leaving the White House, he slept in the workshop again and personally supervised the FSD and Robotaxi projects, trying to open up new imagination space for Tesla with AI.

Recently, Tesla released its second-quarter financial report for 2025. As expected, Tesla once again faced a "double decline" in revenue and profit - achieving revenue of $22.5 billion, a 12% year-on-year decrease; the net profit was $1.172 billion, a 16% year-on-year decrease, and the revenue hit the largest decline in nearly a decade.

However, in the second quarter of this year, Tesla's delivery volume was 384,100 vehicles. Although it continued the year-on-year decline trend from the previous quarter, it increased by 14% quarter-on-quarter compared with the previous quarter. However, looking at the long - term perspective, Tesla's overall delivery volume still shows an unstoppable downward trend.

Once a trend - setter, Tesla seems to be surrounded by competitors overnight. Musk's "political dream" and "tech dream" have to take a back seat to the reality check of performance.

Tesla's Sales are Slowing Down

"Tesla's moat is crumbling," a financial analyst said bluntly after the quarterly report was released. In the first half of this year, the sales of the "sales twins", Model 3 and Model Y, declined by 11.32% and 16.71% respectively in the Chinese market.

Not only in the Chinese market, according to the preliminary sales data from Data Force, in the first half of this year, Tesla's sales in the EU market also declined significantly, a 33% year-on-year decrease.

It wasn't until June this year that driven by the delivery of the new version of Model Y, Tesla's sales began to show signs of a rebound. In the second quarter of this year, Tesla's profit margin improved, and the price increase of the new version of Model Y also contributed to this.

However, the quarter-on-quarter recovery still can't hide Tesla's deep - seated concerns. For many years, Model 3 and Model Y have shouldered the sales responsibility. Tesla's product matrix has hardly progressed, while Chinese new - energy vehicle startups have been launching new models at a rate of one per month, taking a large share of the market from Tesla.

Counterpoint Research predicts that Tesla's global market share will drop to 13% in 2025, and to 7.6% and 0.9% in the Chinese and European markets respectively. For reference, Tesla's market share in China once reached 15% in 2020.

However, behind Tesla's sales crisis, it's not just the saturation of the new - energy vehicle market. Musk's political gamble has also had a backlash. According to surveys by different institutions, 62% of potential buyers believe that Musk's political stance has affected the brand's neutrality. In the second quarter of this year, the recognition of Tesla among American consumers has dropped to 32%.

Tesla's brand value is falling at an unprecedented speed in the history of the automotive industry. In the past two months, Musk has started to tone down his edge. First, he withdrew from political disputes, and then shook hands with Trump to make peace. But will he shift his focus back to the automotive business?

The answer may be no. In the first quarter of this year, Tesla released its "worst financial report ever". But in the subsequent press conference, Musk didn't focus on how to improve the automotive business. Instead, he talked at length about the autonomous driving and robot projects.

Almost at the same time, foreign media reported that Musk personally decided to terminate the Model 2 project, a long - awaited new mass - market model with an estimated price of $25,000 (about 178,000 yuan). At the third - quarter earnings conference in 2024, Musk also mentioned that Model 2 would be mass - produced and launched in the first half of 2025.

The report said that insiders at Tesla believe that Musk has lost interest in car - making. Although most Tesla executives disagreed with canceling the Model 2 project, Musk was determined. He believes that "there's no point in making cheap cars. He wants to do things that can change human civilization."

This can also explain why Tesla's automotive business has been performing more mediocrely in recent years. Musk's attention to automotive R & D has gradually decreased, and there aren't many new highlights in Tesla's automotive products. It can only boost sales through price cuts.

In the first quarter of this year, Tesla's overall automotive gross profit margin dropped to 16.2%, the lowest level in more than a decade. Although Tesla's automotive gross profit margin recovered in the second quarter, automotive sales revenue decreased by 16.6% year - on - year to $16.6 billion (about 118.9 billion yuan).

Uncertainty in Car - Making Plans

Interestingly, although the media has been reporting on this matter extensively, Musk hasn't made any statement. He neither denied nor admitted the termination of the Model 2 project.

Recently, there was a reversal. Tesla officially stated in the report that it launched a more affordable model for the first time in June and plans to mass - produce it in the second half of 2025.

People familiar with the matter said that Tesla's product planning has always been flexible to quickly respond to market changes. However, it should be noted that if this affordable model is the "Model 2" that Musk mentioned, the outside world only knows a few spy photos and the rumored price of $25,000.

Whether this new car has sufficient differentiation or is just a "stripped - down version of Model Y" can only be revealed after it is launched. Moreover, its launch time is half a year later than what Musk promised last year. Whether there will be further delays, only Musk knows.

However, while the affordable model is still undecided, Tesla recently announced that the new model, Model Y L, will be launched in the "golden autumn". It is reported that Model Y L is the previously rumored six - seat Model Y, positioned as a full - scenario, large six - seat luxury SUV. Industry insiders expect the price to be around 400,000 yuan.

Currently, Tesla's existing models are all "veterans", and consumers are bound to suffer from aesthetic fatigue. The family user group is one of the core groups replacing new - energy vehicles in the past two years, and married users account for more than 80% of the middle - class car market.

Therefore, it's reasonable for Tesla to fill the gap in the family travel scenario. After all, this field has nurtured new - energy leaders such as Li Auto and Leapmotor. Leapmotor, known as the "half - price Li Auto", won the sales championship in the first half of 2025.

However, referring to the positioning of Model Y, Model Y L probably won't adopt the "refrigerator, TV, and big sofa" strategy. After all, Tesla has always focused on performance, intelligence, and energy efficiency, which may be different from the strategy of domestic family cars that emphasize "comfort".

But Model Y L also has its own characteristics. In the family car market where "dad cars" are generally relatively bulky, by avoiding competition with competitors in terms of space and comfort, it may also create a new differentiated experience, such as making "dad cars" drive fast.

However, in the large SUV market, domestic new - energy vehicle manufacturers have covered all price ranges. Whether Model Y L can finally break a "new path" in the family car market can only be verified in the third quarter.

Even so, the outside world still can't help but feel a sense of "inappropriateness" about Tesla's move to enter the "family battlefield". In the early days of the new - energy vehicle market, Tesla always played the role of educating users, such as promoting the concept of autonomous driving, cultivating the single - pedal driving habit, and the cool door handle design.

But now, Tesla has to adjust its pace to adapt to the mainstream demand of "cheap and large - quantity" in the domestic automotive industry, which also reflects Tesla's lack of innovation in the automotive business from the side. This brand that believes in tech geeks is becoming a follower in the new - energy vehicle market.

Musk's Pursuit in the Tech Circle

From a disruptor to a catch - up student, Tesla is looking for a way out through compromise. But perhaps because of this, Musk, who has a thirst for adventure in his bones, doesn't want to pour more energy into the automotive business. Instead, he focuses on building his own tech empire.

In April last year, Musk said on social media that Tesla's capital expenditure in 2024 would exceed $10 billion, mainly for joint training and inference of artificial intelligence, which will be mainly applied in the automotive field.

This year, Musk's investment is still increasing. According to Cailian Press, the artificial intelligence company xAI founded by Musk is cooperating with private equity firm Valor Equity Partners and plans to raise up to $12 billion in a new round of financing. In addition, SpaceX, Musk's space exploration company, will also invest $2 billion in xAI.

Currently, xAI has launched the Grok - 4 series of models, known as the "world's most powerful AI". It is reported that the Grok4 large - scale model will be installed in Tesla cars. At the same time, Tesla's FSD has also been approved in more countries.

Musk revealed that Tesla is close to getting approval from the Dutch regulatory authorities for the supervised full - self - driving (FSD) function. In addition, after FSD officially entered the Chinese market in February this year, Tesla also plans to launch FSD on a larger scale.

In June this year, Tesla's Robotaxi officially started pilot operation in Austin and will expand to more states in the next few months. Musk even boasted that "by the end of this year, Tesla will be able to provide Robotaxi services to half of the US population."

In addition, Tesla's robot business is also advancing continuously. Musk said that the company is readjusting Optimus 3 and hopes to increase the annual production of humanoid robots to 1 million units within five years.

However, Musk's "off - track" behavior seems to be highly consistent with his persona. As a recognized "adventurer", he has always been unwilling to be mediocre and eager to change the world.

In the blueprint drawn by Musk, xAI will become the "brain" of his business empire, responsible for developing general intelligence to drive everything, including smart cars, robots, brain - machine interfaces, and satellites and starships of SpaceX. These intelligent terminals will also continuously generate massive real - world data to "feed back" the large - scale model, thus forming a perfect closed - loop.

Because of this, the market's valuation of Tesla has risen from the financial analysis level to the dimension of whether Musk can rewrite the future. Now, investors are not just buying Tesla's stocks, but also the "options" for Musk's personal vision.

It's true that Musk's tech empire has reached an unprecedented height in human business history. But the larger this empire is, the more uneasy investors become. When innovation in the automotive business gradually gives way to market compromise and resources continue to tilt towards non - automotive fields, should Tesla really be the capital for Musk to pursue his dreams?

Only time can give the answer. However, Musk's efforts to save sales at least show that for now, Musk's "tech dream" still can't do without Tesla.

This article is from the WeChat public account "New Media Technology Review". The author is the editorial department of New Media. It is published by 36Kr with authorization.