Tesla (TSLA) Plunges 7.25% Amid Chinese Rival Surge

On July 7, 2025, Tesla's stock experienced a significant drop of 7.25% in pre-market trading, reflecting a tumultuous period for the electric vehicle giant.

Tesla is facing intense competition from Chinese automakers, particularly from companies like BYD and Xiaomi. BYD has surpassed Tesla in global pure electric vehicle sales for the first half of the year, with its "Seagull" model even outpacing Tesla's Model Y in April. Xiaomi, which entered the electric vehicle market just over a year ago, has quickly gained traction with its YU7 model, offering superior range and lower prices compared to Tesla's Model Y. Xiaomi's rapid technological advancements, particularly in AI-driven driver assistance systems, have also posed a significant threat to Tesla's market position.

Tesla's CEO, Elon Musk, has recently announced the formation of a new political party, "America Party," which has sparked concerns among investors about his focus on the company. This political move has led to a significant drop in Tesla's stock, with analysts warning of potential long-term impacts on the company's valuation and brand image. The political involvement has also raised questions about Tesla's reliance on government subsidies and carbon credits, which could be affected by changes in political landscapes.

Tesla's second-quarter delivery figures for 2025 show a 13.5% year-over-year decline, marking the second consecutive quarter of double-digit drops. The company is banking on its Full Self-Driving (FSD) and Robotaxi projects to drive future growth, but the commercialization of these technologies remains uncertain. Analysts have expressed concerns about the potential risks associated with Musk's political activities, which could further impact Tesla's stock performance.