To The Moon

Tesla Inc ($Tesla Motors(TSLA)$) released delivery numbers for the second quarter of 2025 (Q2 2025) on the 2nd of July. Despite analysts' consensus deeming it a "miss", the stock price rose 5% on the 2nd of July and even showed mildly bullish trends early on the 3rd of July before closing down 0.01%. 

The underlying trends in deliveries are complicated yet encouraging - at least from some prime market movers' perspective.

Trend Drilldown

In the U.S., it is an unassailable fact that, while Tesla holds a commanding lead over all other carmakers, its market share has been shrinking for almost five years now.

Source: Created by author using Cox Automotive data

The most significant competitors chipping away at Tesla's market share are fellow American carmakers Ford and General Motors, with overseas carmakers Hyundai and Volkswagen Group also steadily surging ahead. A variety of other legacy carmakers have products now that have been steadily chipping away at the higher end of Tesla's catalogue.

After witnessing explosive growth for over three years - 2021 through 2023 - the EV market is cooling off. The lack of widespread and universal charging architecture (particularly in non-coastal regions), the high cost of EVs relative to Internal Combustion Engine (ICE)-powered cars and a stubbornly persistent affordability crisis among Americans have all been contributory factors in this scenario. Electric Vehicles (EVs) are estimated to have constituted 8% of all new vehicles sold in 2024 while hybrids made up about twice that figure. As of Q1 2025, the market is trending towards a net 8% decline in sales for the full year. Early trends show hybrids essentially continuing to show a modest uptick relative to EVs in the U.S. market.

Note: Sales data from all carmakers haven't been made available as of yet to include in the trend analysis.

After largely keeping up with the growth of EV sales in 2021, Tesla progressively fell behind until it witnessed a net negative growth in sales in 2024 while the market continued to register positive growth. Q2 witnessed a net change in - to coin a phrase - the "overall heaviness" in Tesla's gloom

Tesla Delivery Trends

By the end of 2024, Tesla's main revenue driver - the relatively cheaper Model 3/Y platform - had fallen from 97% production share in 2021 to a generally persistent 95% in 2025. In the first half of 2025 (H1 2025), this had risen back to 97%.

Source: Created by Sandeep G. Rao using data from Tesla, Cox Automotive, China Passenger Car Association (CPCA)

Tesla's plants in the U.S. and Europe mostly service the Western Hemisphere while its plant in Shanghai (China). While Tesla doesn't explicitly break down production or deliveries by plant/region, one trend that remains prevalent is that, over the mid- to long-run, production and delivery numbers don't significantly diverge. In other words, inventories tend to run pretty low and the mapping of regional demand by platform is quite efficient.

Between "China+" (signifying China retail sales and China-origin exports together) and ex-China facilities, deliveries had typically run close to 1.1-1.2 to 1. As of H1 2025, ex-China deliveries outpace "China+" deliveries by 0.35%. From 84% U.S. consumption of its ex-China deliveries, it is estimated that this had slipped down to 78% in Q1 2025. Given that Giga Berlin - which only produces the cheaper Model Y (along with drivetrains and other subsystems) - had delivered its 500,000th EV by the end of March this year, this drop could be construed as the ex-China facilities growing in strength and contribution. On the other hand, the China retail (i.e. domestic sales) composition of its "China+" facility had risen from 62% in 2022 to 78% in Q1 2025, which implies that exports are flagging and indicates rising competition: while Tesla might have a "homegrown innovator" advantage for consumers in the U.S., this doesn't apply in other car markets. Falling sales volumes makes this more and more apparent. 

However, there is one stark standout that stands out: as of Q1 2025, ex-China deliveries were trending at a 28% decline relative to 2024 while China retail was trending at a 20% decline. With Q2 2025 registering a 17% uptick in ex-China deliveries over Q1 2025, ex-China deliveries are now trending at a 18% decline as of H1 2025. Given Mr. Elon Musk's close association with the Trump administration (until a rather spectacular end very recently), there have been strident campaigns against buying Teslas both within the United States as well as the rest of the Western Hemisphere along with bouts of violence against both Tesla owners and dealerships. The near-halving of the decline trend in 2025 here, despite a plethora of options available to buyers, indicates that this might not have been successful. In fact, it might have had the exact opposite effect. 

Maybe "cancel culture" has been cancelled?

Opportunities and Hurdles

Official China retail numbers - that effectively separate out exports from domestic sales - aren't available yet but "China+" deliveries are trending to be down 22% from 2024, wherein it delivered over 916,000 vehicles. In the month of June, China+ deliveries effectively reversed eight straight months of year-on-year decline to register a small uptick. With near-parity in current delivery/production trends between East and the West in 2025 and slightly lesser underperformance in the West despite the opposition (both from politics and the market), this might be a bottom from which the company either rises or doesn't fall quite as much as prognosticated.

However, it is a fact that - despite a trending decline in the U.S. EV market - Tesla's relative lack of freshness in delivering fresh new models to pique consumer interest means that the company has much to lose while competing brands entering the market with relatively newer models have much to gain. These competing brands have strong performance in other markets in Europe as well as China (along with proximate regions). 

Tesla's decision to veer into autonomous driving is a potentially rich new vein to tap into, given the perhaps-inevitable continued loss of market share. Some estimates for its nearest U.S. rival - Waymo - assigns a price tag of nearly $250,000 for a car to be made fully autonomous. The initial Robotaxi launch in Austin (Texas) utilizes the existing Model Y with little by way of additional hardware. If this is the template that will be followed for full-scale rollout, there's potentially anywhere between a 300% to 400% price advantage over the existing competition. For potential Robotaxi fleet operators, this is a massive incentive. 

On the other hand, the aforementioned "spectacular end" to Mr. Musk's "buddy" relationship with the Trump administration over the provisions of President Trump's "One Big Beautiful Bill Act" (actual official name) has raised a worrying prospect to some: a threat to end an estimated $38 billion (till date) in subsidies to Musk's companies. Mr. Musk replied, "I am literally saying CUT IT ALL. Now." (presumably meaning all subsidies being given out by the government)

While the aforementioned Bill axes EV tax credits, it also currently has a provision that lets car buyers write off up to $10,000 a year in interest paid on qualifying auto loans taken out between 2025 and 2028 for the purchase of cars assembled in the US. Tesla is a decidedly American carmaker with facilities and only a small portion of buyers can be assumed to be buying Teslas in cash. This means that Tesla buyers stand to benefit in savings even if EV tax credits are erased.

Be it Musk or Tesla, there is plenty to pooh-pooh for some - perhaps even justifiably sometimes. But, nonetheless, Tesla's earnings call on the 22nd of July would likely be one to watch for. If there are updates about Robotaxi deployments and/or a fresh new model, this would likely be yet another bullish signal.

While some might see the facts presented as net positives (as the stock's present conviction seems to indicate), there are also numerous factors riding against it. The automotive industry has never been a sprint; it's a marathon. And Tesla - like its boss - remains oh-so-interesting. 

Investors with access to European exchanges might want to consider the 3X Tesla ETP ($LEVSHARES 3X TESLA ETP(TSL3.UK)$) during upsides of the stock’s trajectory and the -3X Short Tesla ETP ( $-3X TSLA(TS3S.UK)$ ) during the downsides.

For investors with access to U.S. exchanges, there are a couple of upside-driven ETFs that tactical investors can consider: there’s the Daily TSLA Bull 2X ETF ($Direxion Daily TSLA Bull 2X Shares(TSLL)$) with an expense ratio of 0.95% and there’s also the 2x Long TSLA Daily ETF ( $Leverage Shares 2x Long TSLA Daily ETF(TSLG)$) with a slightly-better expense ratio of 0.75%.

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For broader articles that deep-dives into business and culture in Asia, visit asianomics.substack.com. The latest articles describe the fullness of the rationale behind my recent commentary about platinum, Apple and market outlook that appeared on MarketWatch, Reuters and other media outlets.