According to a July 2 report by the Wall Street Journal, Tesla is going through one of the most difficult periods in its development history. Under the pressure of consecutive two-quarter sales declines, sharp profit drops, shifting policy environments, and management turmoil, Musk told investors that he has shifted his focus to autonomous taxis and humanoid robots.
Data released by Tesla on Wednesday showed that the company's global vehicle sales in Q2 2025 fell 13.5% year-on-year, continuing the 13% decline in Q1. This is one of the most severe periods of sales weakness in recent years for the company. At the same time, high-tech models from competitors continue to hit the market, further squeezing Tesla's market share.
Facing the sales decline, Musk responded that he does not pay attention to short-term market fluctuations. He hopes investors can "look up and see the shining castle on the mountain."
In 2024, more than three-quarters of Tesla's revenue still came from car sales, but Musk has clearly stated that the company's future focus will shift to full self-driving technology and robots. To this end, he has put on hold the previously promised $25,000 affordable model, Model 2, and instead fully focused on developing the all-electric taxi named Cybercab, which will no longer be equipped with a steering wheel or pedals. Musk said bluntly at an investor meeting: "Continuing to develop traditional vehicles is foolish, which is completely against our philosophy."
On June 22, 2025, Tesla officially launched the Robotaxi service in Austin, Texas. On that day, a Model Y successfully completed a self-driving trip from the factory to the customer's home. Musk expects that by the end of 2026, tens of thousands of Tesla vehicles in the United States will achieve full autonomy and be integrated into the Robotaxi shared network. At that time, car owners can rent out their vehicles, similar to the operating model of Uber or Airbnb.
Market cooling, tightening policies, and increased pressure on Tesla's external environment
Aside from internal performance pressure, the overall electric vehicle market in which Tesla operates is also cooling down. According to estimates by Cox Automotive, electric vehicle sales in the U.S. dropped about 7% in the second quarter. Ford, Hyundai, and Kia have all reported declines in electric vehicle sales, while General Motors saw growth due to the launch of the Cadillac Escalade and Chevrolet Equinox electric vehicles.
At the same time, U.S. policy support for electric vehicles may weaken. The U.S. Congress is considering eliminating the electric vehicle tax credit policy, further weakening consumer purchasing intent.
Management turbulence, brand controversy
While the company's strategy has undergone a major shift, there has also been turbulence within Tesla. In the past month, two key executives have left successively: Omead Afshar, who was responsible for manufacturing and sales in North America and Europe, and Milan Kovac, the head of the Optimus robot project.
Previously, Musk had caused controversy due to his political stance and public behavior. Tesla's board members hope he can spend more time on the company's business. Musk has already resigned from his part-time position in the "Office of Government Efficiency" at the end of May. In response, Tesla Chairman Robyn Denholm said that the board remains "confident in Musk and his growth plan."
Musk has recently had multiple disputes with President Trump on social media and even threatened to form a new party to challenge the Republicans. These actions have caused some consumers to develop a negative attitude toward the Tesla brand. (International Finance News)
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