Investor Ross Gerber publicly held Elon Musk partially responsible for the recent rollback of federal electric vehicle incentives in the United States. Speaking on CNBC, Gerber cited Tesla’s aggressive pricing tactics and high-volume rebate lobbying as factors that prompted regulators to reduce tax credits by 50% for vehicles over $55,000. Gerber pointed to internal Tesla memos showing the company’s Model S and Model X sales outpaced the 200,000-unit phaseout threshold last year, triggering a rapid credit phaseout and contributing to a 15% contraction in U.S. EV sales growth during the fourth quarter of 2025.

Despite headlines around Tesla’s recent sales slump, the global electric vehicle market grew by 35% year-over-year in 2025, according to data from the International Energy Agency. In contrast, Tesla shipments rose just 5% in the same period, a sharp deceleration from the 40% growth seen in 2024. Regional sales data show Tesla’s share in Europe fell from 20% to 15% as local manufacturers ramped up production, while in China Tesla’s deliveries plateaued at 1.3 million units, losing ground to domestic brands that introduced 50 new EV models last year.

Tesla announced it will discontinue one-time purchases of its Full Self-Driving package as of February 14, shifting entirely to a $199 per month subscription model. Management projects the move could generate a steady annual run rate of $600 million, compared with a one-off revenue contribution of $450 million in 2025. The subscription pivot is designed to reduce legal liability by keeping customers on continuous software updates and to reset public expectations around autonomous capabilities, which to date have achieved only Level 2 performance in real-world testing.

Tesla enters its Q4 2025 earnings cycle facing a narrow margin of error. Consensus estimates call for a 19.5% automotive gross margin, down from 21.1% a year ago, and revenue growth of just 8% sequentially. Investors will closely watch production costs in Texas and Germany, where unit cost overruns of up to $2,000 per vehicle were reported last quarter. Additionally, guidance for 2026 — including planned capacity expansions in Austin and Berlin that target a combined 1.2 million units of annual output — will be scrutinized for capital expenditure discipline and margin sustainability.