TLDR
- Former Stellantis CEO Carlos Tavares predicts Tesla may not exist in 10 years and could abandon the car business as Elon Musk focuses on robots, SpaceX, or AI
- Chinese rival BYD overtook Tesla in global EV sales earlier this year, with Tesla’s China market share dropping from 16% in 2020 to 5% today
- Tesla missed profit expectations for the fourth straight quarter despite record sales, with shares up only 9% in 2025
- The company faces $400 million in new tariff costs, aggressive price cuts eroding margins, and the elimination of U.S. EV tax credits
- Tesla’s board proposed a $1 trillion, 10-year pay package to keep Musk focused on the company, with a shareholder vote scheduled for November 6
Carlos Tavares resigned from his position as CEO of Stellantis in late 2024. He now says Tesla might leave the automotive industry within the next decade.
Tesla, Inc., TSLA
Tavares told French newspaper Les Echos that Elon Musk could decide to focus on his other ventures. “We can’t rule out that at some point, he’ll decide to leave the automotive industry to refocus on humanoid robots, SpaceX, or artificial intelligence,” Tavares said.
The former executive pointed to Chinese automaker BYD as a major threat to Tesla. BYD surpassed Tesla in global EV sales earlier in 2025.
Tavares called BYD more efficient and cost-effective than Tesla. “Tesla’s stock market value loss will be colossal because this valuation is simply stratospheric,” he said.
Tesla reported $28 billion in revenue this week, up 12% year over year. However, the company missed profit expectations for the fourth consecutive quarter.
The automaker’s CFO revealed that tariffs on auto parts cost Tesla over $400 million. These costs stem from trade policies implemented during the Trump administration.
Tesla’s stock dropped about 4% after the earnings report. Year to date, shares are up only 9%, making Tesla one of the weakest performers among major tech companies.
Competition from China Intensifies
Tesla’s market share in China has fallen dramatically. The company held 16% of the market in 2020 but now controls only about 5%.
BYD, Nio, and XPeng have gained ground with cheaper models and advanced technology. Musk himself acknowledged last year that “Chinese car companies are the most competitive car companies in the world.”
Tesla responded by cutting prices and increasing production at its Shanghai factory. China deliveries rose 33% year over year.
The price cuts helped boost sales volume. But they also squeezed profit margins and affected the company’s premium brand image.
Chinese automakers are not limiting themselves to their home market. BYD has entered markets in Europe and Australia with competitively priced vehicles.
Challenges Mount for Tesla
Tesla faces pressure from multiple directions. The company eliminated U.S. EV tax credits, removing a key incentive for buyers.
To maintain sales growth, Tesla introduced cheaper “Standard Range” versions of the Model 3 and Model Y. These new options undercut higher trims by up to $5,500.
Supply chain issues continue to affect the company. Geopolitical tensions between the U.S. and China pose additional risks to Tesla’s Shanghai operations.
Musk’s divided attention raises concerns about leadership focus. He spent much of the past year working with the Department of Government Efficiency under President Trump.
Tesla’s board recognizes the risk of losing Musk. The company proposed a 10-year compensation package worth about $1 trillion tied to ambitious growth targets.
The pay plan requires Tesla’s market capitalization to increase by 500% to $8.5 trillion. Two proxy advisory firms recommended shareholders vote against the package.
The advisors questioned whether the board has too much discretion in deciding when Musk meets the defined goals. Tesla’s board chair Robyn Denholm defended the proposal.
A shareholder vote on Musk’s compensation is scheduled for November 6. Musk dismissed Tavares’s prediction on X, stating the former CEO “has absolutely no clue.”
Tesla’s valuation currently stands at over 200 times its earnings. Investors are betting on future growth from robotics and AI rather than just car sales.
