Tesla is entering 2026 with an uncomfortable blend of diminishing sales, faltering momentum and a chief executive who has begun to feel more and more disconnected from the company’s actual performance.
On paper, some numbers suggest that Tesla remains a global force. In reality, the cracks are widening—and fast.
Only days after the carmaker announced another year of falling vehicle deliveries, Elon Musk went to X (it was once called Twitter) to boast about the size of Tesla’s production. His claim? That’s approximately two million cars a year, and counting. The numbers say otherwise. And so does the market.
A slump hidden behind big numbers
Tesla delivered around 1.63 million vehicles in 2025, an impressive figure in isolation. It makes the company second in the world for electric vehicle deliveries after China’s BYD. But context matters. It was the second year in a row that Tesla’s sales fell, and it marked the first time this has ever happened to the electric-vehicle maker — even as demand for EVs worldwide continued to soar.
The loss of the No. 1 spot wasn’t all about BYD’s growth. Tesla itself stepped backwards.
Even worse, the downturn was sharper than what the company had warned investors to expect. Sales plummeted in Europe, despite the fact that there was a new lineup that was supposed to have helped regenerate demand for France’s most famous brand.
The Model 3 got its wait-is-over “Highland” update. The Model Y was up next, and its “Juniper” refresh will almost assuredly regain its title as the world’s best-selling car. That revival never came. The Model Y never regained the throne in 2025.
Then there’s the Cybertruck.
Billed as a cultural reset for pickup trucks, the angular electric behemoth debuted with fanfare and reportedly more than one million reservations. Actual sales are far from meeting those early expectations. Production ramped. Demand didn’t follow.
A CEO out of sync with his own company
In this context, Musk’s public relations effort has been the subject of some raised eyebrows.
Speaking of Nvidia’s AI announcements at CES in Las Vegas, Musk brushed aside the competition to remind his audience that Tesla was poised to bring its home-brewed chips online in the coming year and finish it with fully self-driving tech he has been promising for almost a decade. The moment that really stood out to me, however, was the end of his post, where he said Tesla is producing “~2M cars/year & rising.”
That statement doesn’t align with reality.
Tesla produced about 1.85 million vehicles in 2023, its production peak. Since then, output has declined. Production dropped to around 1.65 million units in 2025. The difference between Musk’s declaration and the actual numbers of Teslas on the roads isn’t just a matter of rounding — it’s hundreds of thousands of vehicles.
This isn’t an isolated incident. Musk has continued to claim the Model Y is the world’s best-selling car even after data proved otherwise. For investors and customers, too, the gap has grown harder to ignore.
The tax-credit mirage and its aftermath
Some of Tesla’s recent instability is rooted in policy moves in the United States.
The company’s unexpectedly robust third quarter in 2025 was an illusory surge. Buyers were racing to lock in their EV purchases before federal tax incentives shrank, so future demand got pulled up into a single quarter. The result was a quick acceleration and then a sudden brake.
And as 2026 arrives, Tesla is now grappling with that hangover.
Removal of the incentives — along with higher vehicle prices — has created a demand hole that could last for several quarters. Industry analysts expect a prolonged trough, particularly in Tesla’s American home market.
Ironically, it was Musk who helped create the conditions that led to it.
Politics, backlash, and brand erosion
Musk has spent the past year investing millions of dollars and public influence into political movements that are openly hostile to electric vehicles and climate policy. Tesla later admitted that lobbying over these efforts led to a one-quarter loss of $1.4 billion, but that only tells part of the story.
Musk’s political forays went beyond policy advocacy. His behaviour in public — everything from his inflammatory statements to his controversial associations — led to street protests, turned off long-time customers and tarnished the carefully crafted image of Tesla.
For an automaker whose fortunes hinge on consumer sentiment, that erosion adds up. And the sales numbers appear to show that buyers took note.
As Musk spent months jockeying for attention in high government circles, Tesla’s market position eroded. When that public and messy relationship ended, the reputational damage remained.
Customers walked away. Sales slipped. Momentum stalled.
Promises, pressure, and an uncertain road ahead
Now, the new year presents two uncomfortable questions for Tesla.
First, can the company finally realise ambitions that have long lurked somewhere between daring and fantastical — full autonomy, robotaxis, A.I.-driven manufacturing advances?
Second, will Elon Musk please stop destroying confidence with claims that don’t square with Tesla’s own filings?
The company retains vast scale, technical expertise and brand recognition. But size alone does not ensure growth. And in this maturing EV market, with competition now coming at breakneck pace, the importance of execution — and credibility — has never been more important.
For the time being, Tesla comes into 2026 not as the juggernaut it once was but rather a green giant in search of its stride, headed by a C.E.O. who appears increasingly at ease with shaping the narrative even if the numbers say something else.
The road ahead is still open. But it’s become increasingly uncertain who is at the wheel — or where Tesla is actually going.
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Hey, I’m Badal! I’m super passionate about cars—especially electric ones. Whether it’s EVs, electric trucks, bikes, or anything with a battery and wheels, I’m all in. I love writing blogs and articles that break things down for fellow enthusiasts and curious readers alike. Hope you enjoy the ride as much as I do! Enjoyed reading? You can buy me a coffee on PayPal ☕ → paypal.me/BadalBanjare
