Elon Musk’s Tesla revolutionised how electric vehicles are seen, however, there has been a shift in how they are positioned in the automotive industry. The electric automaker has been facing financial issues since the first quarter of 2025. Tesla’s profits and sales have drastically decreased due to the market being overpowered by electric automobiles and a weak demand. Many are influenced by Elon Musk’s political engagements, which have worked against him, with investors and customers expressing criticism. The automaker continues to gain its previous position in the market with innovations such as autonomous vehicles and robotics. Is this enough to bring them back to expansion?
Tesla’s Financial Decline
The first quarter of the 2025 financial year saw a 71% decline in profits, from a 1.39 billion profit to a scary $409 million in the same quarter. This drastic 9% decline in total revenue caused a 50% stock loss for the company. Acknowledging the great fall of the company, Tesla says:
“It is difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains, our cost structure, and demand for durable goods and related services.”
The market continues to introduce Tesla’s competitors, particularly from Chinese automakers, and this uncertainty has placed Tesla in a position to pause any performance. Elon Musk continues to vocalise his opinions on politics, which have unsettled investors and customers. Tesla faced an automotive revenue decline, with vehicle deliveries declining 13% over the years to 336,681 units. Their gross margins have dropped to 16.3%, due to challenges such as retrieving 46,000 cybertrucks.
Elon Musk’s moves from political discourse
While automakers continue to expand the electric vehicle industry, causing competition for Tesla, Elon Musk’s dominating interest in politics contributes to the fall of his company. Acknowledging the damage of his political involvement, Musk said that he will take a break from advising President Donald Trump’s administration and use that time to rebuild Tesla.
With many disagreeing with his political interests, Elon Musk is targeted with vandalism and worse, investors who may consider pulling out or have already. His time in politics has taken away from the automotive industry, and Musk acknowledges this, saying:
“I think I’ll continue to spend a day or two per week on government matters for as long as the president would like me to do so, and for as long as it is useful, but starting next month, I’ll be allocating far more of my time to Tesla.”
Tesla’s future strategy to become a worthy competitor
While facing these hardships that have brought the company to the brink of demise, Tesla continues to work towards expanding the business niche beyond EVs. With Elon Musk’s SpaceX project, the robot concepts aren’t out of reach. Elon Musk plans to launch the robotaxi transportation in Austin, Texas. The June project aims to begin with 10 vehicles before producing the thousands which Tesla plans.
This project also steps into Google’s Waymo concept. Tesla’s growth with AI technology has led the company to plan humanoid robots. There are regulatory concerns to pass, as the National Highway Traffic Safety Administration (NHTSA) is investigating Tesla’s Full Self-Driving (FSD) software due to safety concerns. These humanoid robots have now taken over in Tesla’s plans for the EV.
While these ideas seem great, they are a risk, and many investors have doubts. Musk has drawn controversy to Tesla and their ability to overcome the problems will show the path to becoming a worthy competitor. Daniel Ives, managing director at Wedbush Securities, says that:
“Tesla has become a political symbol around the world.”
