“Soufflé Under A Sledgehammer”
Elon Musk, Tesla’s CEO, said in 2020 that if the company didn’t deliver on profits, Tesla stock would be “crushed like a soufflé under a sledgehammer.” Messy dessert, anyone?
The fairytale growth story of Tesla had already hit a speed bump in 2024 as revenue and profit declined. In Q1 of 2025, the sledgehammer came down, with net profits dropping a whopping 71%. The remainder of the year represents a pivotal inflection point: Can Tesla reset its growth trajectory, or will it continue to lose ground as competitors get bolder and erstwhile loyal followers flee what they perceive to be a toxic brand?
Investors and industry watchers should keep an eye on three key areas in Tesla’s 2025 playbook: innovation, affordability, and neutrality.
1. Innovation: staving off stagnation while seeking the next big thingTesla’s reputation is built on relentless innovation, but its core product lineup is beginning to show its age. Meanwhile, competitors are flooding the market with fresh models and new features. To reignite excitement, Tesla is betting big on new and diverse technologies. Musk promised the rollout of fully self-driving vehicles in select markets this year, with robotaxis plying Austin in June. Additionally, the Optimus humanoid robot is expected to work in Tesla factories by the end of 2025. Given Tesla’s history of missing ambitious timelines, however, these bold commitments may provide cold comfort to many.
2. Affordability: the missing pieceAffordability has become the new battleground in the electric vehicle market. Tesla’s much-anticipated budget model was supposed to launch in mid-2025, but there are rumblings that it will be delayed to late 2025 or early 2026. This delay is problematic, as rivals such as BYD and Chevrolet are already selling EVs well below Tesla’s price point, especially in markets outside the US, where price sensitivity is higher. The absence of a sub-$25,000 Tesla limits its addressable market and cedes ground to competitors that are scaling up production and gaining market share at a rapid pace.
3. Neutrality: to DOGE or not to DOGE, that is the questionTesla’s brand perception (and that of its leader), once synonymous with innovation and environmental consciousness, is now toxic to many. Musk’s public political stances and association with the US administration have alienated Tesla’s core customer base, particularly among affluent, environmentally conscious buyers who once formed the backbone of its growth. If Musk’s promise during the earnings call that he is going to step back from the Department of Government Efficiency comes to fruition, Tesla will benefit from his less-divided attention. But one wonders how much of the brand’s equity has been irretrievably tarnished.
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