Has Tesla Fallen From Grace?
At the end of the movie "Detective Tang in 1900", after the unsolved case was finally resolved, the US Congress repealed the Chinese Exclusion Act. Streams of "black gold" gushed out from the oil wells, pouring down on the Chinese laborers like rain, marking the beginning of a new era for American industrialization and the automotive industry.
More than a century later, the United States still has an unwavering attachment to traditional fossil fuels.
After the "Great and Beautiful" Act, single - handedly formulated by Trump, was passed, American new - energy vehicle companies represented by Tesla may face an unprecedented crisis.
01. Total Defeat in the Chinese, American, and European Markets
In recent years, this once - dominant electric vehicle company has hit a growth bottleneck.
In 2023, Tesla bid farewell to its previous years of hyper - growth. Its global sales volume reached 1.81 million units, with the year - on - year growth rate dropping to 37.7%.
In 2024, Tesla's global sales volume was 1.79 million units, showing a rare year - on - year decline.
In the first half of 2025, Tesla continued its downward trend, with global sales of 721,000 units, a 13.3% year - on - year decrease.
Source: Tesla's Production and Delivery Volume
The weak sales performance has also exhausted the capital market's patience with Tesla. Since the beginning of this year, Tesla's stock price has dropped by 26% in total, making it the worst - performing among technology giants.
Looking at the regional distribution, Tesla has almost suffered a complete defeat.
According to the data from the Passenger Car Association, Tesla's sales volume in the Chinese market in the first half of this year was 263,000 units, a 5.4% year - on - year decrease.
Although the decline is not significant, it should be noted that this is in the Chinese market where the sales growth rate of pure - electric vehicles is close to 40%. As a result, Tesla's share in the new - energy market has been halved from 15% five years ago to 7.6%.
In the United States, Tesla's "home base", it is also losing ground. According to Cox Automotive statistics, Tesla's sales volume in the US market in the second quarter of this year was 130,100 units, a significant 21% year - on - year decrease.
In the European market, Tesla's sales volume in May decreased by more than 40% year - on - year and has been declining for five consecutive months. In the Western European market with strong purchasing power, Tesla's sales volume has been declining for six consecutive quarters. Deutsche Bank pointed out in a recent report: "Tesla's biggest sales decline may come from Europe again. We believe the brand has been most severely damaged in Europe."
02. Why Has It Fallen from Grace?
Why has Tesla's market position changed so dramatically in just two years? The reasons can be generally divided into the following points:
The rise of Chinese new - energy vehicles has rapidly squeezed Tesla's market space, both at home and abroad.
Elon Musk has been overly active in the political field in recent years, clearly expressing too many political stances, which has offended a large number of his original supporters or neutral potential consumers.
Tesla's innovation ability and product update speed have significantly declined.
Six years ago, Tesla entered the Chinese automotive market as a "catfish" and was given the green light by the superior authorities to build a wholly - owned factory in the Shanghai Free Trade Zone.
This was a win - win deal:
Tesla entered the world's largest automotive market and enjoyed the world's most complete automotive supply chain and a large number of high - quality workers at a reasonable cost. Today, China has become one of Tesla's most important markets globally.
The arrival of Tesla also instantly increased the intensity of competition in the Chinese new - energy vehicle industry. Automobile companies began to invest fully in R & D, effectively addressing issues such as subsidy fraud and product falsification, and giving rise to a large number of highly competitive new - energy vehicle companies.
Today, Tesla has fully reaped the benefits of the Chinese market and has made huge profits in the past few years. However, its former competitors have also developed to a completely different scale.
Whether it is new car - making forces such as NIO, XPeng, Li Auto, and Leapmotor, traditional automobile companies such as BYD, Geely, and Changan, or emerging players such as AITO and Xiaomi, they have all grown into significant players in the market. Tesla can no longer maintain an overwhelming lead in terms of product strength or brand influence, which will inevitably lead to a shrinkage of its market share.
Among them, two models with a similar positioning to Tesla's Model Y, the Xiaomi YU7 and the XPeng G7, have taken the market by storm since their launch:
Within one hour of the Xiaomi YU7's official sale, the number of large - volume orders exceeded 289,000 units, higher than Tesla's half - year sales volume in China. The XPeng G7 received 10,000 large - volume orders within nine minutes of its launch.
This is a microcosm of the changing trend in the domestic new - energy vehicle market. When Tesla no longer has its unique brand halo, more competitive products will inevitably take its place.
In the overseas market, Tesla also has to face competition from Chinese new - energy vehicles.
According to the data from the Passenger Car Association, from January to May this year, China exported 1.16 million new - energy vehicles, a 33% year - on - year increase. The top three in the global pure - electric vehicle market share are BYD, Geely, and Tesla, with market shares of 21%, 12%, and 11% respectively. Today, BYD's monthly sales volume in Europe has exceeded that of Tesla.
In addition to the above external factors, Tesla itself also has some serious problems.
First of all, its leader, Elon Musk, has frequently appeared in the political field in recent years, attracting a lot of criticism.
Musk originally had the image of a forward - thinking technology and business elite, and most of his supporters were left - leaning middle - class white - collar workers around the world. However, in last year's US presidential election, he supported Donald Trump, who represents far - right ideology, and the Republican Party behind him. He also repeatedly expressed his support for right - wing political parties in Europe, which directly led to the loss of his customer base.
The results of a US - based survey showed that nearly 60% of adults had a negative view of Musk.
Since the beginning of this year, a protest movement called "Remove Tesla" has been intensifying in Europe and the United States. Some consumers have chosen to sell their Tesla cars and stocks to express their dissatisfaction with Musk. In European countries, some Tesla owners have even had their vehicles vandalized because of the Musk - themed stickers on them.
In addition, Tesla's innovation ability and product competitiveness have also declined significantly in recent years.
Today's Tesla cars, whether in terms of the three - electric system or intelligent technology, including its once - most - proud FSD system, no longer have an absolute competitive advantage.
In an era when domestic electric vehicles are collectively equipped with end - to - end advanced driver - assistance systems, 800V charging platforms, ultra - fast charging technology, and AI - enabled intelligent cockpits, Tesla's only remaining core competitiveness seems to be consumers' personal admiration for Musk and the Tesla brand.
The current main models sold by Tesla, the Model 3 and Model Y, were launched nearly a decade ago and have not been updated. Consumers' sense of novelty has long since faded. Especially in the Chinese market, where the product replacement cycle is extremely short, Tesla's product update rhythm is obviously too slow. The small car (possibly named Model Q), which was announced to be launched several years ago, has had its release date postponed again and again, seemingly indefinitely.
The aging product lineup has caused Tesla to gradually lose its luster in the fierce market competition.
03. What Cards Does It Still Have to Play?
Currently, what Elon Musk urgently needs to address is the huge negative impact of the newly passed "Great and Beautiful" Act on Tesla.
This act covers all aspects of the US economy and society. The most significant impact on Tesla is that the act stipulates that the tax credit for electric vehicles will be terminated ahead of schedule. At the same time, the federal subsidy program for expanding the charging network has been halved, and more support will be provided to American traditional fossil - fuel - related enterprises and fuel - powered vehicle companies.
This series of "combinative blows" has hit Musk and Tesla right where it hurts, aiming to completely defeat Musk.
Since the conflict between the two sides is irreconcilable, Musk has decided to "set up his own camp".
After the act was passed, Musk immediately launched a poll on social media, asking whether a "United States Party" should be established to "liberate" the American people from the two - party system where the Democratic Party and the Republican Party take turns in power. The next day, 65% of the voters agreed, and Musk then announced the establishment of the "United States Party".
Source: Screenshot of Musk's Social Media
Of course, under the existing "winner - takes - all" election system in the United States, it is almost impossible for any third - party to win the presidential election.
The main purpose of Musk's establishment of a new political party may be to obtain a certain number of seats in the Senate and the House of Representatives, so that subsequent policies will be beneficial to Tesla and his other enterprises.
For example, in the process of formulating the "Great and Beautiful" Act, the game between the two parties was very intense, and the Senate vote ended in a tie at 50:50. It was only when Vice - President Vance exercised his "privilege" that the act was passed. If the new political party established by Musk can obtain some seats, the final result may be completely different.
In addition to political means, Musk also has some "aces up his sleeve" in business.
First of all, Tesla will gradually transform from a "new - energy vehicle manufacturer" into a "mobility technology company" in the future.
In June this year, Tesla launched a Robotaxi pilot project in the United States, using about 12 Model Y vehicles. This news once boosted the confidence of the capital market, and the stock price also rose for a while. Musk has also repeatedly stated in public that Tesla plans to achieve a market scale of millions of Robotaxis by 2026.
However, it is uncertain whether Musk's goal can be achieved even by 2030, let alone 2026.
According to the news that has emerged, Tesla's Robotaxi has encountered frequent problems during internal testing: entering the oncoming lane by mistake, sudden emergency braking, asking passengers to get off at intersections or in the middle of the road, and the vehicle's driving route not matching the direction indicated by the turn signal, etc.
In addition to technical difficulties, self - driving taxis have not received regulatory approval for a long time. The National Highway Traffic Safety Administration (NHTSA) in the United States has not issued any licensing regulations for L4 - related technologies.
In addition, Musk is committed to promoting Tesla's entry into the Indian market in order to find new growth points outside of China, the United States, and Europe.
At the beginning of this year, Musk met with Indian Prime Minister Narendra Modi, and progress was made in their discussions on issues such as tariffs, subsidies, and automobile manufacturing. It is reported that Tesla plans to open its first showroom in India this year.
However, it is by no means easy for any foreign company to enter the Indian market.
First of all, the current penetration rate of new - energy vehicles in India is only about 5%, and the penetration rate of high - end cars is less than 2%. Secondly, the business environment in India is extremely poor and the policies are changeable. The huge fine that Xiaomi suffered in India is still fresh in people's memory. Most importantly, India is an opportunist that "fluctuates" in geopolitics. It first follows the US intention to provoke an air battle between India and Pakistan, and then announces retaliatory tariffs on the United States. Any company investing in India will face great uncertainty.
04. Drastic Changes in the Global Automotive Landscape
Although many people have been excited about Tesla's shrinking market share being taken over by domestic cars in recent years, from a more long - term and broader perspective, Tesla is not the "number - one enemy" of Chinese cars, at least not yet.
Undoubtedly, new - energy vehicles are an important part of the national strategy.
Objectively speaking, it is difficult for China to break through the encirclement of traditional fuel - powered vehicle companies in Japan, South Korea, Europe, and the United States on its own. After all, there are still a large number of people in the West who are fundamentally resistant to new - energy vehicles, and some even believe that "global warming is a hoax".
From January to May this year, the global sales volume of new - energy vehicles was about 7.89 million units, accounting for 20.8% of the global automobile sales volume. In most countries today, fuel - powered vehicles still dominate the market.
As an important participant in the global automotive transformation, Tesla deserves our appropriate support to strengthen the new - energy vehicle camp and accelerate the replacement process of fuel - powered vehicles.
Today, China has sufficient strength and scale to influence the outcome of the US mid - term elections next year and even the next presidential election to a certain extent. At that time, the political party that can show greater sincerity in cooperating with China will have a greater initiative in the elections.
With Musk's smart mind, he will definitely make the choice that is most beneficial to himself. If the United States Party he established can really obtain a certain number of seats in Congress, the vision of "China and the United States joining hands to promote new - energy vehicles globally" may become a reality.
Of course, these are just speculations based on the current situation.
The international situation is changing rapidly, and the internal power struggle in the United States is also extremely intense. China's diplomatic strategy will not only consider the new - energy vehicle industry, as geopolitics, military affairs, and trade are of higher priority.
On the other hand, Musk's personality is also "unpredictable", and his strategic determination is questionable.
Not to mention that he has to manage multiple companies in addition to Tesla, he has invested a lot of energy in "political games" in recent years. Although he has repeatedly stated that he will return to his main business and has left the much - talked - about Government Efficiency Department, he has become deeply involved in politics, and it may be difficult for him to completely extricate himself.
In addition, considering that both Musk and Trump have a certain "performative personality", it is still unclear whether their so - called rift is real or just a show for another farce. Everything remains to be further observed.