Tesla’s Tightrope: Slowing Sales, Political Turmoil, and a Gamble on the Future

Facing declining deliveries, fierce competition, and escalating political entanglements, Elon Musk is betting on autonomous taxis and the Indian market to drive Tesla’s next phase—under intense scrutiny from investors, regulators, and consumers alike.

A Company at a Crossroads

Tesla, the world’s most iconic electric vehicle (EV) manufacturer, finds itself in a period of unprecedented turbulence. On July 2, the company reported global vehicle deliveries of 384,100 units for Q2 2025—a 13.5% drop year-over-year. For the first half of the year, total deliveries amounted to 720,800 vehicles, down by 110,000 compared to the same period in 2024.

The disappointing numbers come amid intensifying global competition, particularly from Chinese automakers. In both China and Europe, Tesla’s market share is being rapidly eroded by rivals offering more affordable EVs tailored to local preferences. Meanwhile, domestic uncertainty in the U.S. is being amplified by the company’s outspoken CEO Elon Musk, whose political activism has added layers of complexity to Tesla’s brand image and market valuation.

Market Pressure: Tesla Faces Stiff Headwinds

In Europe, Tesla's May new vehicle registrations fell over 40%, while Chinese competitors like BYD surged ahead. For the first time, BYD surpassed Tesla in European EV sales in April and is leveraging a strong product mix and robust local partnerships.

BYD reported over 1.02 million EVs sold in H1 2025, outpacing Tesla’s 720,800 deliveries by over 300,000 units. In China, while Tesla’s Shanghai Gigafactory saw some month-on-month recovery, local brands like Xiaomi and Geely have significantly narrowed the innovation and pricing gaps.

A shakeup in Tesla’s leadership has followed the disappointing sales. Omead Afshar, a longtime senior executive overseeing North American and European operations, resigned in late June. Elon Musk has since taken direct control of sales and operations in those markets—signaling his hands-on response to declining performance.

Politics, Public Image, and Stock Volatility

Beyond market challenges, Tesla’s recent turmoil is deeply intertwined with Elon Musk’s expanding political footprint. As head of the U.S. “Department of Government Efficiency” (DOGE)—a real department in 2025 under the Trump administration—Musk has gained access to sensitive federal systems and routinely voices conservative stances on his social platform X (formerly Twitter).

While Musk’s influence in government circles grows, so too does public backlash. A recent national poll found that 57% of Americans view Musk negatively, and Tesla’s brand favorability has declined, even among traditional conservative supporters.

The situation escalated in early June when Musk and President Trump clashed online. Tesla’s stock plunged by over 5% in a single day, wiping out $100 billion in market value. Musk’s opposition to the “Big Beautiful Bill”—a sweeping reform that would reduce EV subsidies and increase tariffs on Chinese components—sparked further controversy, with Trump threatening to revoke federal contracts for Tesla and SpaceX.

In Europe, Musk’s polarizing persona is also creating headaches. In Germany and France, Tesla owners have reported vehicle vandalism amid political tensions, and EU officials have called for heightened scrutiny of Tesla’s operations on the continent.

A grassroots campaign dubbed “Tesla Takedown” has gained traction across the U.S. and Europe, with consumers selling their Tesla vehicles and shares to protest Musk’s political alignment.

Betting the House: Robotaxis and the Promise of Autonomy

In an attempt to shift the narrative and recapture investor enthusiasm, Musk is doubling down on Tesla’s long-promised pivot to autonomous mobility.

In June, a Tesla Model Y completed a fully autonomous ride from Tesla’s Austin Gigafactory to a nearby residence, reaching speeds of 72 mph without human intervention. Tesla is now trialing a fleet of Robotaxi vehicles in Austin, charging users $4.20 per ride within geofenced zones.

Musk has stated his ambition to deploy millions of Robotaxis globally by 2026. However, the road to regulatory approval is uncertain. The National Highway Traffic Safety Administration (NHTSA) has yet to issue formal guidelines for Level 4 or higher autonomous vehicles. In late June, the agency launched a new probe into Tesla’s Full Self-Driving (FSD) system, requesting extensive data on its safety protocols.

Despite the hurdles, Robotaxi is critical to Tesla’s strategy. With core vehicle margins thinning, Musk is positioning autonomy as the company’s next major growth engine—a story that investors must choose to believe, even in the face of delayed timelines and unclear regulation.

India: A High-Cost Entry into a Low-Penetration Market

Facing saturation in its core markets, Tesla is now eyeing India—one of the few remaining countries with large, untapped EV potential.

Tesla plans to open its first showroom in Mumbai this July, importing a small batch of Shanghai-built Model Y units. But pricing will be a challenge: after import duties, each vehicle will cost over $56,000—more than 20% higher than its U.S. price.

India’s EV penetration currently sits below 5%, and luxury EVs represent less than 2% of the market. Tesla’s launch strategy includes importing Supercharger infrastructure, building logistics capacity, and slowly developing a retail and support team.

Despite high upfront costs and policy uncertainty, Musk sees India as a long-term strategic play—hoping to secure manufacturing incentives and eventual market localization.

The Road Ahead: Strategic Inflection or Structural Decline?

Tesla enters H2 2025 amid mounting questions about its business model, market position, and leadership.

Key tests loom:

• Can deliveries rebound and hit the symbolic 1 million mark for the year?
• Will Robotaxi deployments overcome regulatory friction and reach scale?
• Can Tesla grow sales in China and India despite local challenges?
• Will Musk’s political entanglements continue to cloud the brand?

The answers will determine whether Tesla can reignite its growth narrative—or risk becoming a victim of its own volatility.