Source | BohuFN

While it's unclear whether Elon Musk himself feels anxious, Tesla's investors are undeniably worried.

Data reveals that Tesla's stock price has plummeted by almost a third since Donald Trump's inauguration. Particularly alarming was February, when Tesla suffered a cumulative decline of 27.59%, resulting in a market value erosion of roughly $358.286 billion (approximately RMB 2.61 trillion).

In 2024, Tesla experienced its first annual sales decline, delivering 1.79 million vehicles, a year-on-year drop of 1.1%. This downward trend persisted into 2025. According to public data, Tesla's sales in China amounted to 63,238 vehicles in January 2025, marking a year-on-year decrease of 11.5%. This decline was not isolated to China, with European and American markets also witnessing varying degrees of downturn.

As a trailblazer in the new energy vehicle industry, Tesla has been and continues to be a benchmark, leading the field in various aspects such as cost efficiency and energy consumption. However, a sluggish product cycle and increasingly formidable competitors are eroding Tesla's market share.

It's crucial to note that, akin to Lei Jun, Tesla CEO Elon Musk has long served as the company's unspoken ambassador. His legendary experiences and entrepreneurial achievements have endeared many users to Tesla. Nonetheless, Musk's influence in this regard has waned recently. On one hand, his focus is widely dispersed, leading some investors to question his management capabilities. On the other hand, his deep involvement in politics has also sparked opposition from certain quarters.

Another concern centers on the valuation of Tesla, which is heavily supported by the promise of autonomous driving. An international bank's valuation breakdown indicates that Tesla's vehicle business is valued at $89 per share (assuming sales will reach 5.3 million vehicles by 2030), while the autonomous driving business is valued at $168 per share (assuming that 65% of Tesla owners will subscribe to the service at $200 per year by 2040).

However, the performance of Tesla's Full Self-Driving (FSD) system in China suggests it operates similarly to domestic top-tier players, failing to impress and making it difficult to convince users to spend tens of thousands of yuan on the service.

Tesla finds itself in the eye of the storm.

01 Challenges in Selling Cars

In the Chinese market, Tesla has long been a legend.

Its two flagship models, the Model 3 and Model Y, have been on the market for several years. The Model 3 was launched as early as 2016 and only received a facelift in 2023, while the Model Y debuted in 2019 and was updated earlier this year.

Despite these two models, Tesla has remained unassailable in the market. Before the advent of Xiaomi's SU7, the Model 3 held the top spot among luxury electric sedans for an extended period, while the Model Y was the world's best-selling model for several consecutive years.

This is not because Tesla offers everything users desire but rather because it is perceived as practical and reliable by users.

Although the penetration rate of new energy vehicles has reached a critical juncture of nearly 50%, for most users, the commuting functionality of these vehicles still outweighs their intelligent features. This means that when purchasing new energy vehicles, consumers prioritize the vehicle's price, quality, brand's operational capabilities, and reputation.

In essence, Tesla is highly attractive in the 200,000-300,000 yuan price range. Firstly, it boasts strong brand power. Secondly, it has a significant market presence and excels as a mode of transportation. Lastly, it enjoys a cost advantage, giving it the confidence to frequently leverage price reductions and interest-free promotions.

But times have changed. Consumers now have more choices, and domestic automakers are not only emulating Tesla but also pushing the cost-effectiveness envelope.

For instance, Xiaopeng, a long-standing Tesla competitor, has resolutely lowered its profile to survive and introduced the highly cost-effective MONA 03, priced in the 100,000-yuan range. The MONA 03's CLTC energy consumption per 100 kilometers is controlled at around 11.5kWh, approaching the level of the Tesla Model 3, while also coming standard with Xiaopeng's high-end intelligent driving system.

In February this year, Xiaopeng introduced an industry-unique car purchase policy of "zero interest and zero down payment for five years," equivalent to an implicit discount of up to 57,000 yuan on the car price. Relying on the MONA 03 and P7+ models, Xiaopeng's cumulative sales from January to February this year amounted to 60,803 vehicles, marking a year-on-year increase of 375%.

Another example is Xiaomi. Since entering the electric vehicle manufacturing industry, Xiaomi has chosen to benchmark Tesla, making numerous comparisons while launching its performance sedan models. As a national-level consumer electronics brand, Xiaomi and its founder Lei Jun's influence are unparalleled by other emerging forces and traditional joint venture brands. Xiaomi's SU7 has been in short supply since its launch, with production capacity matching deliveries, and it continues to accumulate orders. The SU7 has repeatedly surpassed the Model 3 to become the sales champion among pure electric sedans.

Tesla faces competition not only in China but also in the European market. According to the latest data from the European Automobile Manufacturers Association, Tesla's car registrations in January were only 9,945 vehicles, a sharp decline of 45% compared to 18,161 vehicles in the same period last year, almost halving.

On one hand, domestic automakers are expanding overseas. Reports indicate that BYD sold 1,614 passenger vehicles in the UK in January, while Tesla sold only 1,458 vehicles. BYD's sales increased by 500% year-on-year, while Tesla's declined by approximately 8%. In addition to the UK, BYD's sales also surpassed Tesla in Spain and Portugal in January this year.

On the other hand, European local companies such as Volkswagen have also launched multiple electric vehicle models.

It's worth noting that some reports suggest that Musk's frequent political activities are also a significant factor affecting Tesla's sales in Europe.

02 Awkward Autonomous Driving

In the secondary market, Tesla's valuation has always been far ahead of traditional automakers, despite selling fewer cars. The fundamental reason is that in Musk's grand vision, selling cars doesn't generate profits; intelligent driving does. Tesla is not just an automaker but a technology company.

Intelligent driving is both an aspirational goal and a stringent constraint.

In the realm of intelligent driving, Tesla's direction almost invariably sets the industry's course.

Before the advent of end-to-end solutions, most mass-produced intelligent driving systems adopted a modular architecture: breaking down intelligent driving into specific tasks and assigning these tasks to specialized AI models or modules for processing.

However, rule-based driving has limitations in highly uncertain driving environments, such as difficulty distinguishing between a white truck and a sky background. For drivers, such limitations can have fatal consequences.

Therefore, Tesla began planning to develop an intelligent driving perception system centered on end-to-end algorithms, providing the system with enhanced learning and generalization capabilities. In 2023, Musk announced that Tesla's FSD V12 employs end-to-end technology, which is currently the primary competitive dimension in the field of autonomous driving among automakers.

In the end-to-end approach, data, computing power, and models are crucial for improving the performance of intelligent driving systems. In terms of computing power, Tesla's DOJO supercomputing center is expected to reach a total computing power of 100 EFLOPs (100,000 PFLOPS) by October this year, equivalent to the combined computing power of approximately 300,000 NVIDIA A100s, far surpassing that of domestic automakers.

However, difficulties have arisen in data acquisition. During the 2024 earnings call, Musk mentioned that domestic regulations prohibit Tesla's data from leaving the country, while the United States does not allow Tesla to train models within China. As a result, Tesla must rely on publicly available road videos to train models rather than data transmitted from its vast fleet of vehicles on the road.

In other words, the FSD updated in China is akin to someone who has learned to drive in theory but has never actually driven.

According to numerous domestic influencers' experiences, while FSD demonstrates human-like abilities in certain decision-making scenarios, such as stopping for pedestrians, overtaking on night roads, and bypassing cars that cut in, it still has notable flaws, like being unable to recognize traffic lights.

Given China's notoriously challenging traffic conditions, FSD, which cannot be trained using domestic vehicle data, may struggle to achieve a leading-edge experience. Another challenge is that domestic top-tier intelligent driving players, such as Huawei and Xiaopeng, are not only keeping pace in intelligent driving experience but also making it a standard feature.

With BYD's entry and promotion, intelligent driving will soon encompass not only mid-to-high-priced models but also those priced below 100,000 yuan.

Even in North America, where the technology is more advanced, there aren't many users who pay for FSD. In China, it will be even more challenging for Tesla to monetize autonomous driving subscriptions.

03 Conclusion

Difficulties are not new to Tesla. Before the Shanghai factory commenced operations, Tesla was on the brink of collapse due to production challenges, but it persevered and to a great extent defined the new energy vehicle industry.

In fact, in the view of BohuFN, Tesla's biggest issue is not the lag in its models. Monthly production and sales data prove that it still possesses industry-leading brand momentum and product competitiveness.

The issue of data compliance is also not the most pressing one to address. The performance of FSD in China to some extent confirms its leadership in intelligent driving: even facing data compliance hurdles, FSD remains at the forefront of the industry.

Tesla's biggest challenge remains Musk's commitment. When production capacity was a concern in the past, Musk chose to sleep at the factory. The question now is: what will Musk do?

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