Summary of Key Points
Tesla currently relies heavily on the Model Y, launched in 2019 (accounting for 66% of total sales). New models either face delays (such as the Roadster), poor sales (such as the Cybertruck), or are not designed to be mass-market vehicles (such as the Cybecab/Semi). The reason behind this is that Musk does not want to follow the traditional car companies' approach of expanding sales through a variety of models. Instead, he aims to maintain a market value of $1.5 trillion (twice the combined market value of several traditional car companies) by focusing on "future stories" such as autonomous driving, robotics, and AI. However, this strategy is showing its drawbacks: sales have been declining, Tesla's competitive edge compared to domestic cars is diminishing, and stock prices are unimpressed by delivery figures. Musk is facing the challenge of balancing car manufacturing with storytelling.
I. The Model Y: Tesla's Pillar, but Becoming Obsolete
The Model Y is Tesla's main contributor to sales—1.086 million units were sold in 2025, accounting for 66% of total deliveries, and it is the only electric vehicle to sell over one million units globally. Nevertheless, as a 2019 model, it no longer has many advantages compared to newer domestic cars:
- Outdated Features: Tesla lags behind in features that domestic car companies excel at, such as large screens, comfortable seats, and intelligent cockpits.
- Declining Customer Interest: The number of visitors to a Tesla dealership in Beijing is far lower than those of brands like HarmonyOS or Xiaomi, reflecting a significant decrease in interest compared to the hype when the Model Y was first introduced in China.
- Weakening Competitiveness: Although it still leads in energy efficiency and driving performance, domestic cars have caught up in more tangible aspects such as battery capacity and advanced driver assistance systems.
II. New Models Failing to Meet Expectations
Tesla has not been without new models, but most of them have fallen short of their promises:
- Cybertruck: Promoted as a best-seller with annual sales of one million units, it only began mass production at the end of 2023 and saw sales plummet to 18,800 units in 2025, due to high prices ($53,000 for the four-wheel-drive version) and poor quality.
- Roadster: Launched in 2017 with a planned mass production date of 2020, its release has been postponed, and even at a price of $200,000, it remains unattractive to consumers.
- Model 2: Originally planned for mass production in 2025 and priced at $25,000, the project was canceled in 2024 and has since disappeared from Tesla's product lineup.
- Cybecab/Semi: The Cybecab is an autonomous taxi without a steering wheel, not intended for general sale; the Semi is a heavy truck purchased mainly by large corporations like PepsiCo.
III. Musk's Strategic Approach: Avoiding Traditional Paths
Why doesn't Tesla launch more mass-market cars? Musk understands that traditional car companies' models (used to increase sales and profits) are insufficient to support a high market value. For example, Toyota sells 11.32 million vehicles annually (seven times more than Tesla), yet its market value is a fraction of Tesla's. Musk aims to redefine Tesla's valuation through "future businesses":
- Autonomous Driving: The FSD driver assistance system has 1.3 million paid users globally, and Tesla claims that the car is merely a means to deliver this technology.
- Robots: The Optimus robot is touted as the company's biggest product, with plans for mass production in 2027 and annual sales targets of one million units.
- AI: Tesla is building supercomputing clusters and chip factories with the goal of achieving 50 times the global AI computing power.
These "future stories" help maintain a high market value for Tesla, generating more revenue than car sales alone.
IV. The Consequences of Over-reliance on the Model Y
The long-term reliance on the Model Y is becoming problematic:
- Sales Decline: Tesla's sales have been declining in 2024 and 2025, largely due to the lack of diverse models to meet consumer needs.
- Stock Price Volatility: Although Model 3/Y deliveries increased by 25% in the second quarter of 2025, stock prices fell by 7% because investors were not impressed by new developments.
- Competitive Edge Erosion: In China, while Model Y's monthly sales still outperform those of domestic competitors, its lead is narrowing as domestic cars offer more consumer-friendly features.
V. Tesla at a Crossroads: Balancing Car Manufacturing and Storytelling
Musk is skilled at both manufacturing cars and creating compelling narratives. Over the past seven years, he has used these "future stories" to drive Tesla's market value to new heights. However, challenges have arisen:
- Decreasing Investor Interest: Investors are less willing to buy into empty promises and require tangible results.
- Sales Pressure: The Model Y is becoming outdated, and without new mass-market models, Tesla may fall behind domestic competitors.
- Financing Needs: Musk's AI initiatives (SpaceX and xAI) require substantial funding; Tesla needs stable sales and profits to support these investments.
Musk must now balance car manufacturing with storytelling. He needs to maintain the Model Y's profitability while launching new, market-ready models and ensuring that his "future businesses" become a reality. Otherwise, Tesla's market value myth could collapse.