For over a decade, Tesla has been the poster child of the electric vehicle (EV) revolution globally. At the center of it all was Elon Musk, part entrepreneur, part showman, who turned Tesla into a $1.4 trillion juggernaut by the end of 2024. But as we stepped into 2025, Tesla has entered a slump, going through several problems at the moment. From a steep market cap crash to rising competition from Chinese EV giant BYD, souring public sentiment, and declining sales, Tesla appears to be in the midst of its toughest test yet.
Here's a deep dive to understand everything wrong happening with Tesla and Elon Musk.
BYD quietly dethroning Tesla
For years, Tesla led the EV market. However, China’s BYD (Build Your Dreams) has surged forward with a compelling mix of innovation, affordability, and speed. Take the Tesla Model Y and BYD Han L Sedan, both flagships from their respective companies. On paper, Tesla edges BYD in range but BYD charges ahead in critical areas like fast charging time, and top speed. The most eye-catching gap, however, lies in pricing where BYD is way cheaper.
While BYD has been gaining serious ground over the past couple of months, Tesla still leads in revenue at $97.7 billion versus BYD’s $70.3 billion. But look closer, and the cracks begin to show. BYD’s global EV market share has more than doubled, while Tesla’s sits flat at around 15%. This shift in momentum is more than a statistic as it now suggests that Tesla’s business model is being matched and overtaken by agile, homegrown players in one of the world’s largest EV markets, China.
Meltdown in Tesla: $620 bn wiped out
Tesla's fall isn’t just strategic, it is financial. From its peak valuation of $1.42 trillion in December 2024, Tesla’s market cap has dropped by a staggering 43.66%, standing at $799.98 billion as of March 2025, according to CompaniesMarketCap data.
That’s a $620 billion erosion in just a few months, more than the entire value of companies like Oracle, Mastercard, or more than Netflix and American Express' value combined. Investors are rightfully rattled, especially when the sell-offs are not just external. They’re happening from the inside.
A series of filings with the SEC reveal that Tesla’s top brass have been offloading stock aggressively since February. Board member James Murdoch, a longtime Musk ally, sold $13 million worth of stock on March 10, the same day Tesla suffered its biggest single-day drop in five years, according to Nasdaq data.
Elon Musk’s brother, Kimbal Musk, dumped 75,000 shares for $27 million, while Board Chair Robyn Denholm sold over $75 million worth of shares in two separate transactions. Tesla’s CFO Vaibhav Taneja offloaded more than $5 million in shares. In total, insiders have cashed out around $118 million.
Tesla's public image in dumps? Here’s why
Tesla is not just battling the competition, it is also fighting a branding crisis at the moment as Elon Musk’s increasingly visible political affiliations, particularly his support for government budget cuts via the Department of Government Efficiency (DOGE), have triggered widespread backlash.
Protesters staged what’s being dubbed the world’s largest anti-Elon protest, carving out a 250-meter-long “Don’t Buy a Tesla” message on a Welsh beach last week. More than 80 coordinated protests took place across U.S. cities, urging people to boycott Tesla, sell their shares, and “join the picket lines.”
Critics are especially concerned about Musk’s access to sensitive government systems and his influence on Trump-era policy. Unsurprisingly, Tesla’s brand value fell by 26% in 2024, according to Brand Finance, a massive drop for a company that once stood for tech optimism and sustainability.
Declining Tesla sales, Rising trade-ins
Tesla’s customer loyalty has taken a hit as a result of the dwindling brand image. S&P Global Mobility reported an 11% year-on-year sales drop in the U.S. for January 2025, even as rivals like Ford, Chevrolet, and Volkswagen recorded growth, according to Edmunds data.
In Europe, it was even worse as Tesla’s sales fell 45% in Jan–Feb, even as the continent’s EV market grew by 31%. Tesla trade-ins are also rising sharply, with the rate doubling to 1.4% by mid-March.
Where are the ex-Tesla owners heading?
| New Car Model | % of Tesla Trade-ins |
| BMW i4 | 4.2% |
| Hyundai Ioniq 5 | 4.0% |
| Ford Mustang Mach-E | 4.0% |
Source: Edmunds
Tesla Cybertruck recall adds to worries
Tesla’s much-hyped Cybertruck, claimed to be the “best product ever” by Elon Musk, has also turned into a slow-motion PR disaster for the EV manufacturer. After years of hype, the truck was finally released in late 2023, only to face recalls in early 2025 due to exterior panels detaching mid-drive.
Cybertruck sales have dropped 32.5% between January and February, managing just 2,619 units sold in February. Meanwhile, Tesla’s overall sales dipped 10%, with Model 3 sales slumping 17.5%, according to data provided to InsideEVs by Cox Automotive. It is a far cry from the disruptive marvel Tesla promised back in 2019.
Tesla's Q1 delivery could be ugly
Barclays recently projected that Tesla’s Q1 deliveries would land around 3,50,000 units, far below the 4,00,000-unit consensus. This would represent a 30% drop quarter-over-quarter and a 10% year-over-year decline. While Tesla management has cited production changeovers and seasonality, the reality is that demand is weakening. Even with a Model Y refresh, inventory is expected to shrink by 20,000 units, not a great sign when competition is ramping up production globally.
Silver lining for Tesla?
It may not be all doom and gloom for Tesla just yet as despite the current storm, some analysts are still bullish on the EV giant. Morgan Stanley’s Adam Jonas believes Tesla stock could rebound by 93%. He sees Tesla as an “AI compounder,” with long-term upside in autonomous driving and robotics.
He also points to the upcoming rollout of Full Self-Driving Unsupervised services in Texas later this year, a stepping stone to the long-promised “Cybercab.” Similarly, billionaire investor Ron Baron continues to stand by Musk, arguing that Tesla’s innovation pipeline will eventually outweigh short-term noise.
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