Tesla’s US sales dropped sharply in Q2 2025 compared to the same period in 2024 and 2023, even as non-Tesla EV sales continue to rise. On a global scale, the company has also experienced a persistent decline over the past two years, raising urgent questions: can Tesla recover and return to meaningful growth, or is it sliding toward a deeper structural crisis?
At the heart of the debate lies Tesla’s Full Self-Driving technology. Elon Musk has repeatedly promised that FSD Unsupervised will be ready by the end of the year, allowing Tesla owners to let the car fully handle driving while they rest or watch a movie.
Should this breakthrough arrive, it could completely transform Tesla’s trajectory. Demand would likely skyrocket, production could grow by about 30%, and quarterly deliveries might surpass 500,000 vehicles. Stronger margins, higher average prices, and booming FSD software sales would provide fresh justification for Tesla’s massive market capitalization, perhaps even prompting the construction of new factories. The opposite scenario is equally plausible. If Tesla fails to deliver a mass-market unsupervised FSD system, the company risks stalling.
A temporary sales bump from buyers rushing to take advantage of EV tax credits in the US would likely be followed by steep declines once incentives phase out. In Europe, Tesla’s sales are already sliding with little sign of recovery, while in China domestic competitors are intensifying their innovation, squeezing Tesla’s market share.
Meanwhile, the company continues pouring vast sums into hardware and software development without generating enough revenue from FSD to offset the costs, putting further strain on margins.
This year could become a defining year for Tesla. Either it stages a spectacular rebound fueled by genuine autonomy, or it faces mounting financial and competitive headwinds that undermine its global standing. A middle path is possible, but the company’s fate hinges on whether Musk can finally deliver on the ambitious promises that built Tesla’s reputation.
