How bad is the trouble at Tesla?
Tesla’s recent momentum has slowed somewhat in the past few months. The brand recently posted a 71 per cent plunge in profits, and it seems things are looking grimmer than CEO Elon Musk is willing to admit.
However, Musk insists Tesla isn’t “on the ragged edge of death.” But a closer look at the numbers suggests otherwise. Tesla isn’t making money from selling cars anymore and only stayed profitable last quarter by selling $US595 million worth of regulatory credits to rivals. Without those lifelines, the company would be deep in the red.
And those regulatory credits might not be around much longer. With the Trump administration aiming to axe federal emissions rules and strip California and other states of their tougher clean air standards, Tesla’s side hustle could soon vanish, leaving a hole in its balance sheet.
Read more Tesla Robotaxi revealed
Meanwhile, Tesla’s market share is under siege. Once the undisputed leader in EVs, Tesla is now losing ground in China and Europe, even as overall EV sales keep climbing. Chinese automaker BYD is about to snatch Tesla’s crown as the world’s top EV seller which will be a symbolic blow.
Making matters worse is Musk himself. His increasingly outspoken political activities — from slashing federal agencies to backing far-right parties overseas — are turning off buyers and investors alike. Even Tesla fans on Wall Street are nervous that the brand has taken lasting damage, despite Musk’s recent claims he’ll dial back his political involvement.
Still, Musk remains upbeat. He told investors Tesla has weathered worse and is still set up for a bright future. But the hard data tells another story: Tesla’s core automotive profit margin — once an industry-leading 30 per cent — has shrunk to just 12.5 per cent, its lowest level in over a decade.
It’s a stunning reversal for a company that, not long ago, was America’s most profitable carmaker and the world’s most valuable automaker by a mile.
Part of the problem is surging competition. Legacy carmakers and newcomers alike are flooding the market with compelling EVs, especially in China. And while Tesla still has plenty of believers, even they acknowledge the brand has lost some of its glow.
Tesla’s big bet now? Robotaxis. Musk is promising a driverless ride-hailing service, starting in Austin, Texas, alongside humanoid robots working in Tesla factories. Investors briefly cheered news that U.S. regulators are relaxing rules on autonomous vehicles, sending Tesla shares up 10 per cent. But the reality check is harsh: major rivals like GM and Ford have scaled back their robotaxi dreams, calling them unprofitable for the foreseeable future.
Even Musk has admitted to overhyping Tesla’s self-driving timelines, joking last year that he’s “the boy who cried FSD.”
Now, with rising costs, intensifying competition, regulatory uncertainty, and a battered brand, Tesla faces a reality that can’t be spun with optimism alone. The future may still be electric — but Tesla’s dominance is no longer guaranteed.
