Tesla loses 29% market value, drops to 10th place

Tesla, which started the year as the world’s eighth-largest company by market capitalization, has now dropped to tenth place.

The company has lost 29.3% of its value in 2025, bringing its market cap down to US$917 billion as of June 5.

The decline is driven by weakening demand for EV and ongoing controversies involving CEO Elon Musk.

This week, Musk’s feud with US President Donald Trump escalated after Trump threatened to cut government contracts with Musk’s companies.

The threat followed Musk’s criticism of Trump’s tax and spending bill on social media.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Tesla’s transformation from EV pioneer to conventional competitor

Tesla’s market decline reflects a fundamental shift in the EV market structure that’s been building throughout 2025.

While Tesla’s Model Y remains the best-selling EV globally with 201,773 units delivered in Q1, the company’s overall market share has contracted significantly across key regions 1.

In the US, Tesla’s market dominance has eroded to just 10.1% of the EV market, while European sales plummeted by 49% year-on-year, signaling a dramatic shift from market creator to conventional competitor 1.

This transition mirrors patterns seen in other innovative industries, where first-movers eventually face margin compression from traditional competitors, in Tesla’s case, from both established automakers like Volkswagen and newer entrants like BYD, whose Seagull model claimed third place in global BEV sales 1.

Chinese manufacturers in particular have achieved competitive advantages through aggressive pricing and rapidly improving quality, with BYD’s weekly registrations surging 26% in China while Tesla’s fell 6.67% 2.

2️⃣ Financial gravity catching up with Tesla’s growth story

Tesla’s financial performance has dramatically deteriorated, with Q1 2025 showing a 9% year-over-year revenue decline to $19.3 billion and a striking 71% drop in net income to $409 million 3.

Vehicle deliveries fell 13% to 336,681 units, marking Tesla’s weakest quarterly performance in nearly three years and highlighting the company’s vulnerability to competitive pressures 3.