By 2023, nearly one in five cars sold worldwide were electric, 19% of which were Teslas. That year, the company’s mid-size Model Y SUV became the world’s best-selling car, with more than 1.2 million leaving the forecourt. It kept that title in 2024.
Just three months into 2025, things have taken a turn. CEO Elon Musk’s role as senior adviser to Donald Trump has attracted protests, boycotts and vandalism. Trump’s use of the White House lawn as a Tesla showroom and his labelling of protesters as “domestic terrorists” have failed to turn the tide.
Tesla sales have plunged in Europe, with a 49% drop in January and February compared with the same period last year, according to the European Automobile Manufacturers' Association (ACEA). The controversy has been impossible to ignore and major shareholders have called on Musk to step down as CEO.
“Paradoxically, the Venn diagram of people that love Elon and people who buy EVs has very little overlap. That is not great for Tesla,” said Jay Nagley from automotive consultancy Redspy.
That is far from the company’s only problem, however. Last week, US safety regulators recalled nearly every Cybertruck over concerns about external panels falling off, the eighth such recall since the end of 2023. Sales of the unusual vehicle have failed to reach Tesla’s expectations.
The challenges do not stop there. “There's a broader issue than that, which is that the product line-up was getting dated anyway,” said automotive industry expert David Bailey, professor of business economics at the University of Birmingham. “They haven't launched a genuinely new car in a long time – apart from the Cybertruck, which has been a flop – and they've not brought a mass-market car to market.”
Those issues have left the door open for competitors – and rivals are already taking advantage. “We’re seeing companies like BYD aggressively move in while Tesla stumbles,” said Mike Thompson, motoring expert and COO at Leasing Options.
Yesterday (25 March), the Chinese company announced annual revenue of $107bn in 2024, almost $10bn more than Tesla. Shares had already jumped last week after the firm revealed new battery and charging technology that enables charging power of 1 megawatt, meaning five minutes of charging could provide 400km (249 miles) of range.
“Consumers have been hesitant about EVs because of charging times, and BYD is solving that problem before Tesla can,” said Thompson. “Other brands like Hyundai, Kia and even legacy automakers like VW and Ford are stepping up their game, offering quality EVs with better pricing and fewer headaches. The competition has never been stronger and Tesla is no longer the undisputed leader.”
More market share and revenue for other companies could mean more resources for further technological development. Thompson added: “When a market leader stumbles, it gives competitors a chance to shine and that means faster innovation.”
The Han L sedan’s Flash battery has ultra-fast ion channels that reduce internal resistance by 50%, according to BYD. When combined with the liquid-cooled Flash charging stations, it could provide a charging experience equivalent to filling up a petrol tank. BYD plans to build 4,000 of the stations in China.
Tesla’s own reliable supercharger network had been a market leader, experts told Professional Engineering, but BYD could take that competitive advantage if it achieves its goals.
Autonomy is another key area of competition for Musk, but there, Nagley said, “the Chinese are eating his lunch… and arguably becoming world leaders in vehicle automation. The Chinese are now starting to build cars with the equivalent of Tesla’s Full Self-Driving, but the whole Chinese car costs barely more than the optional Tesla system.” (Full Self-Driving has a one-off cost of $8,000, while the BYD Seagull – which sells for about $10,000 in China – has it’s own God’s Eye advanced driver-assistance system.)
Cost is not the only issue. The American company has a “fundamental problem” from pursuing pure-camera autonomy, Bailey said, whereas other firms are also using Lidar in their top-range systems for superior performance. “Its massive share price before this recent collapse was very much around Musk selling a vision to investors about a driverless future, and even people being able to rent out their cars as driverless cabs. That still looks a very long way away for Tesla.”
Tesla still has the lead on software, Bailey added, with performance improvements enabled years after purchase. A new mass-market car could change the company’s fortunes, the experts said, along with efforts to placate potential customers put off by the company’s leadership.
However the market develops, Thompson said, diversification will be good news for drivers: “It means better choice, better pricing and, ultimately, a more dynamic and competitive EV market.” But with tariffs threatening to fly in all directions amid Trump’s growing trade wars, it is hard to say who will come out on top.
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Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.