The EV world has always had a flair for drama.
Tesla (TSLA) was able to build its empire on it, becoming part of Silicon Valley’s spectacle, part of Detroit’s disruption.
However, 2025 feels different, as the buzz around Elon Musk’s EV behemoth has shifted from market control to doubt, with rivals chipping away at its once-impenetrable lead.
In China, BYD’s factories hum day and night, dishing out some of the sleekest sedans and crossovers at enviable prices that Tesla just can’t match.
Moreover, in Europe, legacy automakers are delivering the kind of range and design that once set Tesla apart. Additionally, in the U.S., incentives-fueled expansion has begun to wane, just as competition intensifies.
That said, the rapidly evolving landscape has caught the eye of one of the auto industry’s most seasoned voices. Former global auto chief and past CEO of Stellantis,Carlos Tavares rarely minces words.
His recent remarks on Tesla’s future were curt, direct, and loaded with implications that have stakeholders in the automotive space listening closely.
Ex-Stellantis boss warns Tesla’s edge may not last
For years, Tesla was hailed as the bogeyman of the auto industry. Now, Carlos Tavares, who led Stellantis until late last year, feels the tables are clearly turning.
Speaking to Les Echos, the longtime sector veteran said that Tesla could “leave the automotive industry” entirely within the next 10 years as Chinese rival BYD continues chipping away at its market share.
Related: Intel CEO doubles down on rare partnership
“We can’t rule out that at some point, [Musk] will decide to leave the automotive industry,” Tavares warned, feeling that Tesla’s CEO will potentially pivot completely to SpaceX, humanoid robots, or AI.
His reasoning is that Tesla’s stock valuation is “simply stratospheric” and unsustainable at current levels at this point. For a little color, the stock’s trading at over 228-times trailing-12-month non-GAAP earnings, 71% above Tesla’s five-year average.
Also, there’s data backing the caution.
Tesla’s China market share dropped to just 5% from 16% in 2020, as BYD surges ahead in terms of global EV sales. Meanwhile, Tesla stock has continued its upward ascent, rising almost 67% in the past six months and achieving a year-to-date gain of over 7.4%.
More Tesla:
- Tesla shareholders respond to latest push against Elon Musk
- Tesla’s surprising delivery data hide a serious problem
- Tesla Q3 report needs to show a clear future
Tavares’ remarks come at a point where Tesla’s locked in an uphill battle, with tariff pressures, evaporating EV tax credits, and a massive $1 trillion pay package vote meant to keep Musk focused on cars.
If he’s correct, Tesla’s next decade would have to do little with market domination and more with survival.
Quick takeaways:
- Ex-Stellantis CEO Carlos Tavares feels Tesla might exit the car business within a decade.
- He calls out Tesla’s valuation as being “simply stratospheric,” warning it’s unsustainable.
- With its China market share down to 5% from 16% in 2020, along with tariffs and fading incentives, Tesla’s next decade may be about survival.
Q3 shows Tesla’s center of gravity shifting beyond autos
For years, Tesla’s identity was pretty much straightforward, which was to sell more cars, at higher margins, and quicker than anyone else. However, that model has become a lot harder to sustain over the past few quarters.
In Q3, Tesla reported $28.1 billion in sales, a 12% bump on a year-over-year basis, with automotive revenues clocking in at $21.2 billion (+6%), while energy and services revenue soared 44% and 25% YOY, respectively.
Nevertheless, the margins that defined Tesla’s dominance are fading fast.
Related: Legendary fund manager Ray Dalio could soon be your assistant
Operational margins dropped to 5.8%, while gross margin dipped to 18%. That’s a massive contraction for a business typically known for its profitability. Similarly, GAAP net income slid 37% to $1.37 billion.
Deliveries came in at 497,099 vehicles, a company record, but even that comes with a caveat. The outsized deliveries report had everything to do with buyers chasing the $7,500 U.S. EV tax credit before it expired, inflating Q3 demand in the process.
Moreover, the competition isn’t easing.
BYD shipped nearly 582,500 BEVs to Tesla’s 497,100 in Q3, significantly expanding its global lead. In China, Tesla’s NEV market share currently hovers between 4% and 6%, down from double digits a few years ago.
Tesla is still growing, but it’s operating more like a diversified energy-and-software company at this point, with AI and autonomy being its biggest catalysts ahead.
