Elon Musk’s Tesla, once the undisputed leader of the electric vehicle (EV) market, is now facing major headwinds. In 2025, Tesla’s share price has plunged by over 40% year-to-date and its brand value has declined sharply, shaking investor confidence. The company’s first quarter was particularly challenging, with revenue falling 9% to $19.34 billion. Automotive margins dropped to 16.3%, and deliveries declined 13% compared to the previous year—marking some of Tesla’s weakest performance in recent times.

Tesla’s biggest challenge is fierce competition, especially from Chinese EV brands like BYD and Xpeng, who are offering lower prices and rapidly increasing their market share in Europe and China. At the same time, Tesla’s brand, once synonymous with innovation, is eroding due to both greater market skepticism and the controversial political positions taken by CEO Elon Musk.

One of the biggest uncertainties now revolves around how to value Tesla. Investors are asking: is it still just an EV manufacturer, or something more—a tech company or even a robotics and AI leader? The answer is unclear, especially as its high-profile Robotaxi initiative remains unproven. Although Musk has highlighted autonomous driving and ride-hailing as Tesla’s future growth engines, these technologies still face regulatory hurdles, technological challenges, and unanswered questions about profitability.

Despite these setbacks, Tesla maintains a high valuation relative to traditional automakers, reflecting investor hope that its ambitions in robotics, AI, and autonomous vehicles will eventually pay off. However, without concrete progress and sustained revenue growth, this optimism is at risk.

Ultimately, Tesla is at a crossroads: its EV business is under pressure, the company’s future bets are unproven, and investor uncertainty is high. In this atmosphere, Tesla’s valuation remains difficult to justify, and the next few quarters will be crucial in determining whether Musk’s vision can restore the company’s momentum.