Is Tesla's Downward Spiral Over?
Not exactly…
For the past year and a bit, we all stood around, almost gleefully watching Mr DOGE’s sales figures plummet. It felt like karma for this oligarchic edgelord’s political machinations, like there was some vague sense of justice in this messed-up world. Many others, including myself, called this downward spiral the death of Tesla because, in truth, this wasn’t just down to Musk’s bad PR but a chronic mismanagement of the company, causing it to lose its lead, stagnate, and fall behind the competition in many ways. After all, Tesla is but a shell of what was once promised. But, over the past few months, Tesla’s sales have suddenly shot up. Is this a rebound? Is Tesla recovering? Is Tesla still doomed? Is it on track to meet the colossal targets that have justified its insane sky-high stock price? Is the proverbial egg on my face? Well, let’s find out.
I want to give credit where credit is due. Tesla’s recent sales rally is damn impressive, particularly when you consider the current political environment of its main markets. The FT reported that Tesla delivered 480,126 vehicles in 2026 Q2, smashing its 404,000 prediction. That is 24.99% growth year-over-year and is the best Q2 delivery in Tesla’s history(though still approximately 10,000 short of the best quarter ever). This is no guarantee that 2026 will be a good overall sales year for Tesla; Q2 has historically been quite a variable period for the company. Also, the vast majority of this sales growth happened in Europe and China, and this locality could make this sudden growth short-lived. However, growing sales in Europe, considering the entire continent is beginning to turn on US hegemony and its tech oligarchs like Musk, is remarkable. Whatever the sales and PR teams are doing, it’s working.
Tesla brown-nosers have used these sales figures as evidence that Tesla isn’t dying and that critics, like me, were wrong.
So, let’s clarify what I mean when I say Tesla is dying. I mean that its speculative value is dying.
As I have said before, if the market valued Tesla along standard norms, it would lose some 94% of its market cap. This insane speculative value is based entirely on Musk’s promises, not just for self-driving cars but also for technological dominance, colossal scale, market dominance, and massive profit margins. Moreover, Musk’s interest in the company seems to now solely be based on pushing this speculative valuation. In order to keep that speculative value, Tesla either needs to follow through and become the veritable monopoly it promised to become, or it needs to at least be perceived to be making progress in that direction.
The question is, is this sales growth enough to keep this speculation alive? Because if it isn’t, the value will drop, and Musk won’t be interested in sustaining Tesla anymore. He could let it run its course into obscurity or merge it with SpaceX to pump the market manipulation scheme he has going on over there. But either way, Tesla has to demonstrate enough progress to justify its speculation, or it’s curtains for the EV maker.
Sadly, I don’t think this sales increase will be enough.
This growth has far more to do with the market than Tesla.
In 2026 Q1, European BEV sales increased 26.2% year-over-year; in April alone, European BEV sales grew a gigantic 42% year-over-year, and while 2026 Q2 European BEV sales figures haven’t been released yet, they are likely to be far higher than the previous year. While China’s overall BEV market is currently shrinking due to its small, short-range BEV segment sharply contracting, its premium BEV segment (where Tesla operates) is growing rapidly. A variety of factors can cause this growth. Europe and China are already being hit hard by oil price increases from the Iran war, which are predicted to get worse, prompting many consumers to switch to electric vehicles to avoid rising bills. The cost-of-living crisis in Europe worsens this cost avoidance, causing even well-off buyers to behave cautiously and buy EVs.
This is a case of a rising tide raising all boats. But Tesla’s boat isn’t floating quite as well as it should. It appears Tesla’s sales growth might actually be behind the market growth. In other words, Tesla likely hasn’t made up ground in the market and is still trailing behind its competition. So these delivery figures have less to do with Tesla itself doing better and more to do with the fact that the number of people buying EVs has dramatically risen.
This is perfectly demonstrated by BYD, Tesla’s main global competitor. For years, Tesla was the world’s largest BEV maker, with BYD being a distant second. Over the past few quarters, BYD has caught up and been vying for Tesla’s №1 spot. But, in 2026 Q2, they delivered 557,090 BEVs globally. That is 16% or 77,000 more than Tesla delivered and is actually substantially more than Tesla has ever delivered in a quarter! BYD has now comfortably cemented its lead against Tesla to become the new largest electric vehicle maker on the planet. Bear in mind that the global BEV market is also becoming significantly more diverse as new players enter and succeed.
I don’t think you quite realise the monumental nature of this change. Back in Q1 of 2020, Tesla held a 29% share in the global BEV market. It has dropped consistently since then to just 13% by Q1 2026, and as BYD shows, it is likely to have fallen again in Q2 2026. Tesla is falling behind rapidly.
The narrative of Tesla’s speculative value over the past decade has been that it would keep ahead of the competition and retain its dominant market share as the market grew. The astronomical profits from that dominance would then fund its self-driving and Robotaxi rollout, enabling it to smother the competition until Tesla essentially dominates global personal transport and rakes in hundreds of billions of dollars in revenue each year.
If Tesla really was winning back its market share and becoming as dominant as it needed to be to justify its stock price, BYD simply wouldn’t be pulling ahead of it like this.
