Tesla, the electric vehicle giant led by Elon Musk, has recently experienced a rough patch.
A combination of fierce competition, political controversies surrounding Musk’s ties to former U.S.
President Donald Trump, and a lack of innovation has put the company in a difficult position.
These factors have led to a significant drop in Tesla’s stock price, raising concerns about its future in the global automotive market.
Rising Competition from China’s BYD
Tesla’s dominant position in the electric vehicle market is no longer as secure as it once was.
In 2024, China’s BYD came very close to overtaking Tesla, selling 1.76 million vehicles—just 30,000 fewer than Tesla’s 1.79 million.
The rise of BYD, which also includes hybrid vehicles in its sales figures, has helped it outpace Tesla’s revenue, reaching $107.2 billion compared to Tesla’s $97.7 billion last year.
This shift in the balance of power comes at a time when Tesla is grappling with a declining market share in Europe.
In fact, Tesla’s registrations in the European Union fell by a staggering 49 percent in the first two months of 2025.
Analyst Garrett Nelson from CFRA Research points out that Tesla’s initial forecast for a 20-30% sales increase in 2025 has now been revised down to a possible 5% decline, and things could get even worse.
The Impact of Political Controversies
Tesla’s troubles are compounded by its CEO Elon Musk’s political associations, which are negatively impacting the company’s image.
Musk’s vocal support for far-right politics in Europe and his prominent ties to the Trump administration have drawn significant backlash.
This has sparked protests and acts of vandalism against Tesla stores and charging stations in multiple countries, including the U.S. and Germany.
In fact, an arson attack on Tesla’s German factory in March 2024 halted production for a period of time.
The political controversy surrounding Musk has raised questions about Tesla’s brand image, with Nelson warning that taking a political stance, whether Republican or Democrat, could have damaging consequences.
Tesla’s stock has already taken a hit, losing roughly a third of its value since the beginning of 2025, largely due to these controversies.
The Struggles of Sticking to the Same Models
Another issue contributing to Tesla’s decline in market share is its lack of new models.
Since the release of the Model Y in 2020, the company’s lineup has remained relatively unchanged, with few new vehicles to offer.
While the highly anticipated Cybertruck was finally released in late 2023, it has faced a series of setbacks, including disappointing sales and numerous recalls.
The most recent recall in March 2025 affected all 46,096 Cybertrucks in circulation, citing potential issues with body panels coming loose.
Tesla’s promise of an affordable, low-cost model continues to be just that—a promise.
Consumers and investors alike are left wondering when this vehicle will actually make its debut, leaving the company at a disadvantage in the increasingly competitive EV market.
A Potential Lifeline in Full Self-Driving Technology
Despite these setbacks, Tesla still has a potential lifeline in the form of its full self-driving (FSD) technology.
Nelson believes that Tesla has a significant advantage in the autonomous driving space, which is a multi-trillion-dollar market.
While competitors like Google’s Waymo have been operating robotaxis for years, Tesla’s FSD technology has the potential to disrupt the industry and capture a substantial share of the market.
However, Tesla’s highly anticipated Cybercab—an autonomous taxi service—is still months away from beginning road trials in Austin, Texas.
Additionally, the regulatory environment for fully autonomous vehicles is still evolving, with the Trump administration preparing a new federal framework for autonomous driving.
Looking Ahead: What Tesla Needs to Regain Its Position
As Tesla navigates these challenges, many are calling for more leadership within the company.
While Elon Musk remains a beloved figure among Tesla shareholders, his attention seems to be focused more on his other ventures and political activities than on Tesla’s day-to-day operations.
Nelson suggests that Tesla could benefit from appointing a senior executive to manage the company’s daily operations during this critical period.
Tesla’s next steps will be crucial in determining whether it can maintain its position as the leader in electric vehicles, or whether competitors like BYD will surpass it in both sales and innovation.