Tesla Is In Trouble: A Hard Look at the EV Giant’s Growing Problems

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For years, Tesla was the golden child of tech and auto investors. It was a growth story unlike any other — led by a visionary (or polarizing) CEO, pushing electric vehicles into the mainstream, disrupting legacy automakers, and minting countless Tesla millionaires along the way.

But in 2025, the picture looks much different.

Tesla isn’t just facing market saturation or short-term headwinds. It’s facing a full-blown identity crisis, regional demand collapses, and serious reputational damage — all while CEO Elon Musk’s political leanings are turning consumers and investors away.

Let’s break down what’s really going on and why Tesla may no longer be the bulletproof growth play it once was.

1. European Sales Are Collapsing

One of the most serious issues Tesla is currently facing is a massive drop in sales across Europe.

In Germany — Tesla’s most important European market — sales have plunged 77% year-over-year. The UK, another major market, saw Tesla’s sales fall by 45% in the same period. These aren’t small drops. These are collapse-level numbers.

And it’s not just because of broader EV demand slowing down. In fact, Europe’s EV market is growing, up 28% this year. But Tesla is missing out. Why?

• Reputation Damage: Musk’s support of far-right figures and political comments have caused major backlash in countries like Germany and France, where public opinion takes these matters seriously.

• Labor Problems: In Sweden, Tesla refuses to sign union agreements. This has led to massive strikes and logistical disruption. Not only are cars not being delivered on time — the media coverage has made Tesla look hostile to workers.

• Increased Competition: European and Chinese automakers are flooding the market with EVs. Brands like BYD, Volkswagen, and Renault are offering cheaper alternatives that are good enough — and often better suited for European roads.

Only Norway is an outlier, with Tesla sales up over 200% there — but that’s largely due to tax credits and aggressive Model Y discounts, not lasting competitive strength.

2. U.S. Buyers Are Turning Away — And It’s About Politics

Back home in the U.S., Tesla is facing a different kind of problem: people don’t want to be associated with Elon Musk.

It’s no secret Musk has made his political views known. Once aligned with the left-leaning, climate-conscious crowd that formed Tesla’s early customer base, he’s now vocally anti-woke, supportive of controversial figures, and active on X (formerly Twitter) promoting polarizing takes.

The result?

Many of Tesla’s core customers — educated, environmentally conscious, liberal-leaning — no longer want to drive a car with the Tesla logo.

On the other side of the political aisle, it’s not any better. Musk recently fell out with Donald Trump in a very public spat. After Trump called Musk a “bullshit artist,” Tesla stock dropped 14% in one day — erasing $150 billion in market value.

So now, liberals don’t like him, conservatives don’t trust him, and Tesla is being boycotted by the very audience that used to be its most loyal supporters.

A movement known as “Tesla Takedown” has even emerged — an organized effort to protest and discourage Tesla purchases because of Musk’s public behavior.

3. The Cybertruck Is a Flop

Tesla’s long-hyped Cybertruck was supposed to be the company’s next great product — the truck that would challenge Ford, Rivian, and GM in the lucrative U.S. pickup market.

But the reality has been underwhelming at best, and borderline disastrous at worst.

• Multiple recalls have plagued the vehicle within months of release.

• Reviews are mixed, with complaints about practicality, size, software, and visibility.

• Deliveries are significantly below expectations, and production is slow.

The excitement wore off quickly. Analysts now estimate Tesla will never come close to hitting its original production or revenue targets for the Cybertruck.

This matters because the Cybertruck wasn’t just a novelty — it was supposed to be a meaningful revenue driver. Without it, Tesla’s product roadmap looks increasingly stale.

4. Margins Are Shrinking Fast

Tesla built its empire not just on growth, but on profitability — rare for a high-growth tech-driven company.

But in 2024 and 2025, margins have been falling quarter after quarter.

Why?

• Tesla has been slashing prices to maintain volume, which directly eats into margins.

• Operating costs have gone up, partly due to labor issues and inflation.

• Competition has forced Tesla to offer more incentives, hurting average selling prices.

For years, Tesla bulls pointed to the company’s industry-leading gross margins (often around 25–30%) as proof of long-term sustainability. But now those margins have fallen closer to 15%, and in some cases lower.

That’s a huge red flag for long-term investors.

5. Stock Volatility Tied to Elon Musk’s Behavior

Tesla’s stock used to be volatile because of growth surprises and earnings reports. Today, it often moves 5–15% in a single day because of something Elon Musk tweets.

From endorsing political candidates to feuding with Trump to hosting controversial guests on X, Musk’s behavior constantly draws headlines — and not the kind that boost confidence.

This might be tolerable for a meme stock, but not for a $600 billion automaker with institutional investors, pension funds, and ETFs depending on it.

Even long-time Tesla bulls like ARK Invest’s Cathie Wood have recently reduced their exposure. It’s hard to trust a stock when its CEO’s personal brand has become such a liability.

6. Reputation Among Institutions Is Deteriorating

Beyond retail investors, Tesla is now starting to lose favor with large funds and corporate partners.

• Environmental, Social, and Governance (ESG) funds have dropped Tesla from their portfolios, citing labor issues, executive behavior, and supply chain concerns.

• Government contracts and incentives, once a reliable boost for Tesla, are now being scrutinized.

• Car rental companies are quietly scaling back Tesla fleets due to maintenance concerns and declining consumer demand.

This isn’t just about what’s happening now — it’s about what institutions expect in the future. If trust in Tesla’s leadership and execution continues to decline, it will become harder for the company to attract long-term capital.

7. EV Market Is Getting Crowded

Finally, Tesla is no longer the only game in town.

The world’s biggest car companies — Toyota, GM, Hyundai, BMW, Mercedes, Volkswagen — are all investing tens of billions in electric vehicle production. Many of them are learning from Tesla’s strengths while avoiding its mistakes.

Chinese companies like BYD and XPeng are scaling up fast and starting to compete globally with cheaper prices and strong technology.

Tesla’s first-mover advantage is no longer enough. To stay ahead, Tesla will need to innovate faster, fix its brand, and execute perfectly.

Right now, they’re doing none of those things.

Is Tesla Still a Good Investment?

As investors, we have to separate the product from the brand, and the CEO from the fundamentals.

Yes, Tesla is still one of the most important EV companies in the world. It has an impressive charging network, advanced software, and huge potential in energy storage and AI-driven driving.

But the short-term picture is filled with problems:

• Collapsing sales in Europe

• Political backlash in the U.S.

• A flop with the Cybertruck

• Shrinking margins

• A volatile CEO dragging down sentiment

At this point, Tesla is no longer a pure growth story — it’s a turnaround story.

For long-term investors, the question isn’t just, “Will Tesla grow again?”
It’s: “Can it rebuild trust, fix its fundamentals, and stop self-sabotaging?”

Until then, caution is warranted.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.