Mikkel Christensen
Tesla has long been the symbol of the electric vehicle revolution.
But new financial results and strategic decisions suggest the company is facing a period of significant pressure.
According to the BBC, Tesla’s total revenue fell by 3 percent in 2025, which is the first annual decline in the company’s history. At the same time, profits plunged in the final quarter of the year.
It remains uncertain whether 2026 will signal a recovery or a continued slowdown, as Tesla has not yet released its full annual revenue figures for the year.
Elon Musk and recurring controversies
Tesla is closely tied to Elon Musk both as its visionary driving force and public face.
According to The Week, Musk has been involved in a series of controversies over the years, sparking debate among investors and the public. His statements and political engagement have made him a polarizing figure.
The BBC has also reported that Musk’s political role in the United States has triggered reactions among parts of Tesla’s customer base, including protests at dealerships.
When a company is so closely associated with one individual, that person’s actions can directly affect brand stability and investor confidence.
Competition and BYD’s rise
At the same time, competition in the EV market has intensified significantly.
According to the BBC, Chinese automaker BYD overtook Tesla in January as the world’s largest electric vehicle producer. Statista further shows that BYD has surpassed Tesla in the production of battery electric vehicles.
An analysis by V2Charge highlights that BYD’s vertical integration, including in-house battery production, gives the company a structural cost advantage.
European and Chinese manufacturers have expanded their model lineups, and Tesla has adjusted prices in several markets to maintain volume. Market leadership is no longer clear-cut.
Shift from cars to AI and robots
Amid growing competition, Tesla has shifted its strategic focus.
According to the BBC, the company is discontinuing production of the Model S and Model X and will instead use its California factory to produce humanoid robots under the name Optimus.
Tesla has also invested 2 billion dollars in Musk’s AI company xAI and has signaled significantly higher capital expenditures in the coming years.
The company is increasingly positioning itself as an AI and robotics business. Yet while future visions are expanding, car sales still account for the majority of its revenue.
Tesla is not necessarily facing collapse. But the combination of leadership exposure, tougher competition and strategic transformation marks a pivotal moment for the company.
Sources: BBC, Statista, V2Charge, The Week
