For Tesla's car sales, having the Model Y is enough.
Elon Musk, who has been criticized by shareholders and the media for "losing interest in car - making", should be able to breathe a sigh of relief for the time being.
Although Musk admitted in a conference call that the company would go through several tough quarters, Tesla managed to get out of the dismal situation of the previous quarter in the second quarter and presented a financial report that exceeded market expectations.
Although Tesla's core data in the second quarter still showed a double - digit year - on - year decline: revenue was $22.496 billion, a 12% year - on - year decrease; net profit was $1.172 billion, a 16% year - on - year decrease. However, the good news is that it increased by 16% quarter - on - quarter.
Looking into the more specific and core car - selling data. Excluding the income from carbon credit sales, Tesla sold 48,000 more cars than in the first quarter, and the average price per vehicle also increased from 274,500 yuan to 293,900 yuan. The simultaneous increase in volume and price also enabled Tesla's automotive sales revenue to exceed the market expectation of $15 - 15.2 billion, reaching $15.8 billion.
The top contributor to stabilizing Tesla is still the Model Y. In the first half of this year, the Model Y, whose price was increased by more than 10,000 yuan (a $1,000 increase in the US market), still ranked first in the domestic SUV sales list. It almost single - handedly boosted the gross profit of the automotive business from 16.2% to 17.2%. In the future, Tesla doesn't seem to plan to launch new models and will focus on building the Model Y ecosystem: whether it's the low - cost version of the Model Y in North America or the long - wheelbase six - seat version of the Model Y specially designed for the Chinese market.
Leaving the heavy task of car - selling to the Model Y is obviously a compromise. Tesla's free cash flow in the second quarter didn't improve despite selling more cars but continued to decline by $500 million, largely because it is still heavily investing in AI.
In the conference call, Musk described Tesla as a transforming company and encouraged investors to focus on its latest achievements in autonomous taxis and robots.
To put it simply: leave car - selling to the Model Y and other things to AI.
Tesla cars are hard to sell
The difficulty in selling cars is not a problem unique to Tesla. However, since 2025, Tesla's sales decline has become more obvious.
As early as 2024, Tesla's car sales started to decline. Its sales volume in that year decreased by 1.1% compared with 2023, which was the first decline since 2015. But in the first quarter of 2025, this year - on - year decline soared to 13%. In the first half of 2025, Tesla delivered 720,800 vehicles, about 13.3% less than the same period last year.
Looking at the main segmented markets. In the first half of 2025, Tesla sold a total of 263,400 vehicles in the Chinese market, a year - on - year decrease of about 5.4% compared with 278,300 vehicles in the same period last year; in the US market, the total sales volume was 271,600 vehicles, a year - on - year decrease of 10.8%; the sales decline in the European market was the most severe, with a year - on - year decline of 33%, and only 108,800 vehicles were sold.
The primary reason for the slow - selling cars is, of course, that the competitors are getting stronger and consumers have more choices.
In the past, in terms of model iteration, Tesla can be said to have inherited the traditional virtues of its American counterpart Intel. Some domestic manufacturers can launch three new models in a year, but the Model 3 didn't have its first facelift until six years after its launch. The facelift time of the Model Y was a bit shorter, but not by much, and it still took five years.
If in the past Tesla could rely on its brand power to outperform new players and use price cuts multiple times thanks to its excellent gross profit to counter the aggressive competition from Chinese brands, then the rise of Xiaomi and Huawei has become the last straw that broke the camel's back for Tesla.
As soon as the Xiaomi SU7 was launched, it became a hit and surpassed the Model 3 to become the best - selling pure - electric sedan in China. The Xiaomi YU7 even set a record for large pre - orders on its first - sale day, and its production capacity was sold out overnight. In 2024, the overall sales of new energy vehicles in China increased by 35.5% year - on - year, while Tesla's sales in the Chinese market only increased by 8.8%, failing to outperform the market.
The situation in the European and American markets is similar.
In Europe, Volkswagen became the new champion in electric vehicle sales with 133,465 vehicles sold, a year - on - year increase of 78%. In addition to Volkswagen, BMW, Skoda, and Renault also achieved quite good results, with year - on - year increases of 14%, 146%, and 58% respectively. In the US, the sales of Chevrolet's pure - electric vehicles increased by 130.5% year - on - year, with 47,639 vehicles sold.
However, factors outside the product itself are also significant. Due to Musk's deep involvement in politics, consumers' aversion to him has spread to Tesla. For example, some media reported that up to 94% of German consumers surveyed clearly stated that they would not buy Tesla. This has largely exacerbated Tesla's market decline: in California, the core market for electric vehicles in the US, Tesla's registration volume has declined for seven consecutive quarters.
Under pressure, Tesla chose to rely on the Model Y.
Rely on the Model Y
Some time ago, Li Xiang, the founder of Li Auto, responded to the "copy - cat" accusation on Weibo: "Is the iPhone a copy - cat design? The best products in the world are all designed in a copy - cat style."
The Model Y is indeed one of the best products in the world.
In 2023, 1.22 million Model Ys were sold globally, making it the undisputed global sales champion that year. Even in 2024 when growth stalled, 1.185 million Model Ys were still sold, and the gap with the sales champion Toyota RAV4 was only more than 2,000 vehicles. In the most competitive Chinese market, the Model Y is still regarded as the benchmark for pure - electric vehicles: it offers an excellent driving experience and leading high - speed range.
Even in the first half of this year, the Model Y has been the most hard - working one in the family. In Europe and the US, the Model Y is still the best - selling pure - electric model; in China, although the top two positions in the overall electric vehicle sales list are occupied by Geely Xingyuan and BYD Seagull, the quantity gap between the Model Y and them is not large, but the price gap is significant.
In the past five years, Tesla has not been without new model iterations, but the 4680 battery cells and the Cybertruck, which are in line with Tesla's concept, have all suffered setbacks.
When the family is in trouble, the "copy - cat" versions of the Model Y have finally arrived.
Whether it's the Model Y or the Model 3, performance is the most prominent label, which is a necessary feature for a benchmark product. But half a month ago, Tesla officially announced the six - seat Model Y L. Compared with the Model Y, the Model Y L has adjusted the overall height and wheelbase of the vehicle so that adults can sit in the third row. Such a trade - off is obviously to meet the needs of the Chinese consumer market: first, it is big enough, and second, it can accommodate two generations of people.
There are also new developments for the affordable Model 2, which was halted by Musk last year. Musk said in the conference call that the cheap model looks like the Model Y and will be launched in the fourth quarter of this year. According to the exposure pictures of some bloggers, the cheap model has abandoned some of Tesla's previous definitions of electric vehicles: for example, the panoramic glass roof is replaced with a non - sunroof design, and the front - row center armrest area is changed to a through - type structure.
There are many benefits to relying on the Model Y. As an industry benchmark, the Model Y has a strong presence in consumers' minds. Whether it's the six - seat Model Y L or the cheap version of the Model Y to be launched in the fourth quarter, Tesla has a low cost in explaining its products to the outside world.
In addition, creating "copy - cat" versions of the Model Y can make the most of its influence and fill in the markets that have not been covered, especially the booming mid - and low - end price segments. Last year, the cumulative retail sales of large and mid - large SUVs in China reached 1.646 million vehicles, a year - on - year increase of 52.5%, of which new energy vehicles accounted for more than 80%. According to the data from the Passenger Car Association in June, in the current new energy market, the sales of vehicles below 200,000 yuan are growing rapidly and now account for 70%.
However, the strategy of compromising with the market is often not suitable for benchmark brands, whether it's Apple or Tesla. As a new brand without a long - standing heritage, Tesla was able to occupy the high - end and benchmark positions not by pricing but by real technology and the associated technological luxury. The Model Y is not without flaws. Domestic competitors have been trying to challenge it but have not succeeded for a long time, and brand loyalty has also contributed a lot. We can also see this situation with Xiaomi and Huawei.
In the long run, if new cars are more about compromising with the market than bringing new technological experiences, Tesla may also become an ordinary brand.
Of course, Musk doesn't plan to rely on the Model Y to maintain a sense of technology.
Musk's ambition is not in car - making
Not long ago, Musk reposted the results of Dongchedi's assisted - driving test, emphasizing that Tesla achieved the best results among the tested models without local data, and commented that they would strive to achieve a perfect score of 6/6 (there were two test items, and both of Tesla's tested models passed 5 items).
Autonomous taxis and humanoid robots have become Musk's focus. In April this year, Musk told investors: "I encourage you to look beyond the bumps and potholes on the road ahead and look up at the shining castle on the hill." And in the second - quarter conference call, Musk also glossed over the sales decline and encouraged investors to focus on Tesla's latest achievements in autonomous taxis and robots.
This is not hard to understand. Tesla's high valuation is because it is more regarded as a technology stock rather than an automotive stock. Adam Jonas, an analyst at Morgan Stanley, wrote in a research report in May: "Most investors believe that the valuation of Tesla's core automotive business is between $50 and $100 per share.
Musk has spared no expense in investing in AI. In 2024, Tesla's capital expenditure exceeded $10 billion. In the second quarter of this year, although Tesla is not as prosperous as before, its R & D expenses reached $1.59 billion, still exceeding market expectations.
However, in the short term, it's still difficult for Tesla to convert its AI investment into real revenue. In June this year, Tesla launched an invitation - only autonomous taxi service and increased the single - ride fare in July. But its operating scope is much smaller than that of its competitor Waymo, and the autonomous taxi model itself is also subject to regulatory restrictions.
The progress of the humanoid robot Optimus is even more difficult. According to Cailian Press, currently, Tesla can only produce a few hundred Optimus robots. On the one hand, the team is not stable. Last month, Milan Kovac, the former engineering vice - president and the head of Tesla's Optimus humanoid robot department, announced his departure. On the other hand, Musk's excessive publicity of Optimus and his nit - picking about its flexibility may lead to the same dilemma as the Cybertruck.
Before seeing the vast potential of AI, Musk still needs the Model Y to earn him the money to pursue his dreams.
Reference sources
1. DearAuto: "The cheap version of the Model Y may be priced below 200,000 yuan. Is this a 'tribute' to Chinese brands?"
2. Dolphin Research: "Tesla's 'life - and - death question': With the vast potential of AI, does poor car - making performance still matter?"
3. Passenger Car Association: "Analysis of the national passenger car market in June 2025"
4. The Wall Street Journal: "Tesla is in a mess, but Musk's ambition is no longer in car - making"
This article is from the WeChat official account "Bohu Finance", author: Lu Fei. Republished by 36Kr with permission.