Things Are Bad At Tesla And They're About To Get Much Worse

Forbes

The EV company’s sales are tanking in all major markets as its Chinese rivals are surging. But Tesla’s problems are just beginning.  Read the full story on Forbes: https://www.forbes.com/sites/alanohnsman/2025/03/27/things-are-bad-at-tesla-theyre-about-to-get-much-worse/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, things are bad at Tesla.

00:03They're about to get much worse.

00:07Tesla is in a world of hurt.

00:09Sales in California, its main market in the US,

00:12plummeted 31% in January from a year ago.

00:15European numbers are even worse,

00:17dropping 43% in the year's first two months.

00:21And in China, by far its most important market

00:23for profitability, Tesla sales crashed 29% through February.

00:28Its stock has tanked, dropping 34% this year.

00:33A backlash has grown against part-time CEO Elon Musk,

00:36who also leads five other companies,

00:38with protests at Tesla stores and the torching of vehicles

00:41as he carries out a clumsy attempt

00:43to slash government workers and spending

00:45as Trump's doge master.

00:47But things are about to get worse.

00:50Falling sales indicate that the company's financial health

00:53is fundamentally faltering as competitors are surging,

00:56particularly rival BYD.

00:59The Chinese EV and battery maker,

01:01for the first time, topped Tesla in revenue in 2024

01:04and is on pace to leave it in the dust

01:06as the global leader in electric vehicle sales this year.

01:10Tesla's brand is becoming toxic in California,

01:13which has nurtured it since the Roadster arrived in 2008.

01:17It's even failing on the technology front,

01:19with BYD outpacing it

01:20with a super-fast charging battery system

01:23and Waymo dominating in self-driving cars,

01:25which Musk has bet the company on.

01:28The worst by far, though,

01:29is what's happening to Tesla in China,

01:31where it opened its Shanghai plant in 2019.

01:34That plant, the first in China

01:36wholly owned by a foreign carmaker,

01:38marked a turning point for Tesla,

01:40fueling a massive sales spike

01:42and pushing it into the black consistently

01:44thanks to low-cost Chinese labor, parts, and logistics.

01:48But a decline in that market,

01:50where Tesla has seen consistent growth up until this year,

01:53threatens to narrow its already-shrinking profit margins.

01:56A big reason for slower sales

01:58is that China's domestic EV companies

02:00are starting to beat Tesla on, well, everything.

02:04Shareholder Ross Gerber,

02:05CEO of Gerber Kawasaki Wealth and Investment Management,

02:08said, quote,

02:10"'China had a plan

02:11when they let Tesla have a fully-owned factory.

02:13They wanted the technology and the knowledge and experience.

02:17With that came a risk China would take that technology

02:19and build better stuff.

02:21That's exactly what they're doing.

02:23Now they've got really competitive vehicles,

02:25really competitive technology,

02:27and the vehicles are cheaper."

02:30Tesla didn't respond to a request for comment.

02:33Tesla's Model Y remained the top-selling EV in China last year,

02:36but BYD, the country's biggest carmaker,

02:39sold far more EVs combined,

02:41with a number of models ranging from its $10,000 Seagull hatchback

02:45to its Yuan Plus compact SUV, starting at $16,000.

02:50Those are less than half the cost of a Tesla,

02:52which positions itself as a more premium brand.

02:55A Model Y base price starts at $34,500,

02:59and the Model 3 sells for about $32,000 and up.

03:03BYD's low prices are also helping it grow global sales

03:06in Latin America, Australia, and Europe.

03:09High tariffs so far have blocked it from exporting to the U.S.

03:13BYD also just unveiled a new five-minute battery charging system,

03:17four times faster than Tesla's superchargers.

03:21CATL, the world's largest battery maker and a Tesla supplier,

03:25is now dismissive of Musk's battery ambitions,

03:27including a newly-launched lithium cell designed for heavier vehicles.

03:32CEO and founder Robin Zhang said in a Reuters interview late last year

03:35that he'd flat-out told the billionaire that Tesla's new battery cell,

03:39quote,

03:39"...is going to fail and never be successful."

03:43BYD, which is led by billionaire co-founder and CEO Wang Chuanfu,

03:48who Forbes estimates is worth $28 billion,

03:51is also coming after Tesla's full self-driving system.

03:54That system, despite the name, still requires human monitoring.

03:58The Chinese company is making its so-called God's Eye automated driving

04:02a standard feature on new vehicles,

04:04competing directly with Tesla's system for hands-free driving.

04:08BYD is hardly the only player Musk and all other global automakers

04:13has to worry about.

04:14Tu Le, managing director of consultancy SinoAuto Insights,

04:18told Forbes, quote,

04:20"...people in the West are starting to pay attention to BYD,

04:23but there's this whole gaggle of other Chinese EV makers

04:26they have no idea about."

04:29For full coverage, look out for a Forbes Talks video interview

04:32with Alan Onsman, and check out his piece on Forbes.com.

04:37This is Kieran Meadows from Forbes.

04:39Thanks for tuning in.

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