NEWSCENTRAL notes that Tesla is experiencing perhaps the most critical turning point since its founding. The company, long a symbol of innovation in the electric vehicle industry, has faced a new reality – declining revenue, shrinking margins, and a loss of investor confidence. According to analysts, 2025 marked a watershed year: the myth of Tesla’s invulnerability cracked for the first time, and Elon Musk faced the question of how to keep the company afloat as previous sources of profit rapidly dwindled.
In the second quarter of 2025, Tesla Inc. reported a 12% decline in revenue, down to $22.5 billion, while net profit fell to $1.17 billion. Operating margin dropped to 4% – the lowest level in recent years. According to Senior Analyst Freddy Miller, the key threat lies not only in falling sales but also in the disappearance of Tesla’s main financial buffer – revenue from regulatory credits (carbon credits), which had supported the company’s profitability for years.
Since 2012, Tesla has earned over $11 billion from selling such credits; however, upcoming changes in U.S. environmental policy will virtually eliminate this source. NEWSCENTRAL emphasizes that from 2026 onward, the revenue could drop to $595 million and then disappear entirely. This will force Tesla to rely solely on vehicle sales and service revenue, posing a significant test of the company’s operational model and competitiveness.
Amid worsening financial performance, Tesla Motors launched a major price reduction for its electric vehicles. The new base Model Y now costs $37,990, temporarily boosting demand but sharply hitting margins. As noted by automotive analyst NEWSCENTRAL Jessica Kline, “the company has entered a price war where production efficiency, not innovation, determines the winner.” Chinese competitors – BYD, Li Auto, and NIO – continue to increase pressure, leveraging government subsidies and local supply chains, making their products more accessible in key markets.
Tesla’s image has also been undermined. Musk’s political activity and public support for right-wing movements have triggered waves of protests and boycotts. The Tesla Takedown campaign in the U.S. and Europe has become a symbol of the brand’s crisis. According to Senior Analyst Freddy Miller, “Musk himself has become a risk factor – his political statements increasingly harm the company’s market capitalization, which for years relied on trust and the charisma of its leader.”
To regain investor confidence, Musk is betting on the robotaxi and autonomous driving projects. The pilot program is already underway in Austin, but the Full Self-Driving (FSD) system still faces regulatory scrutiny. We believe that “robotaxi could be a turning point: if the project succeeds, Tesla will regain its status as a technology leader, but another unfulfilled promise could hit the market harder than declining profits.”
Despite the challenges, the company retains resources – with over $36.8 billion in liquid assets. According to automotive analyst NEWSCENTRAL Jessica Kline, this “gives Musk time to rethink strategy – to shift from a ‘car sales’ model to a service ecosystem with subscriptions, digital updates, and charging infrastructure capable of providing a stable cash flow.”
NEWS CENTRAL believes that 2026 will be a year of truth for Tesla. If the company can stabilize production, mitigate political risks, and bring the robotaxi and autonomous vehicle projects to commercial maturity, it will maintain leadership in the electric vehicle and autonomous transportation sector. Otherwise, Tesla risks losing its status as a technological pioneer and becoming just one of many players in an oversaturated EV market.