Tesla Sales Keep Falling As Board Bribes Musk To Pay Attention To Business

Shipments from the Tesla Shanghai factory in July totaled 67,886 cars according to preliminary data released by China’s Passenger Car Association on August 3, 2025. That is the total production figure for both domestic and export markets and represents an 8.4 percent decrease from July of 2024.

According to Bloomberg Hyperdrive, that factory in Shanghai has recorded declines in monthly production in six of the seven months this year. It is experiencing increased competition from BYD and Xiaomi. The latter has just launched the new YU7 to compete with the Tesla Model Y. Tesla has responded with a new 6-seat version of the Model Y for China, but that looks to be very much of a “get me over” compromise vehicle rather than a clean sheet design. How it will be received by Chinese customers remains to be seen.

What is especially concerning about the Tesla downward spiral in China is that NEV (new energy vehicle) sales, which include battery electrics and plug-in hybrids, are surging even during the summer months, which are usually the slow season for new car sales. In July, 1.18 million new energy cars were sold, a 25 percent increase over the same month in 2024.

Some of that increase in sales may be due to fierce price cutting in the Chinese auto industry. The Chinese government has issued several warnings to automakers to stop cutting prices so they are equal to or lower than the cost of production. According to The Guardian, Xi Jinping has spoken of the problem directly. In an unusually blunt speech this month, he criticized provincial governments for blindly over-investing in artificial intelligence, computing power, and new energy vehicles — all of which are industries that Beijing has identified as strategic priorities but are at risk of overheating.

Hutong Research, an independent advisory firm based in Beijing and Shanghai, said in a recent note: “Government agencies across China have moved swiftly in response to Xi’s recent remarks, pledging to implement supply-side reductions. These developments highlight not only the elevated political attention to excess capacity but also the breadth of the problem across China’s economy.”

The price cutting means many Chinese customers are keeping their wallets in their pockets, as they anticipate lower prices in the near future. BYD has slashed the price of its cheapest Seagull models to 55,800 yuan ($7,800), 20 percent below the official retail price, Great Wall Motors released a new version of its Ora 3 car in June that is priced about 20 percent less than it was last September.

Last month, China put forth an amendment to its law on pricing for the first time since 1998. If enacted, it would strengthen the government’s ability to set price limits, identify “unfair pricing behavior,” and curb “involution-style” competition, including using market dominance to influence prices and bulk sales.

But the responses may not go far enough, some analysts said. Antonia Hmaidi, a senior analyst at Merics, said: “I am not convinced that the Chinese government will do something to curb in any significant way because so far at least no one’s been really punished for investing too much in strategic priorities.” She said few EV companies were actually profitable in China and many others were inextricably linked to local governments that do not want to see them go under.

“We are seeing some changes in specific types of action that the government is taking that are pointing towards this. But we’ve seen these kinds of actions before, and nothing came of it. And ultimately, you would need to provide an alternative to a lot of these local governments, for instance,” she said. One solution to a glut of products in China could be to sell even more overseas, which could aggravate foreign companies and regulators. “I think in the short term, there will be more tension with most of its trading partners,” Hmaidi added.

Last week, the politburo, the group of leading officials in the Chinese Communist Party, met to discuss the economic outlook for the year ahead. The Guardian reports that while those in attendance did not mention the anti-involution campaign specifically, they spoke of the need to “regulate disorderly competition” in the economy. By any conceivable measure, the chaos in the Chinese auto industry today certainly qualifies as “disorderly competition.”

Tesla Travails Continue In Europe

Tesla continues to take it on the chin in Europe. In a separate report, Bloomberg says Tesla sales in Europe in July fell by more than 50 percent compared to the same month last year. By contrast, BYD saw an explosion of sales to more than four times what they were a year ago. In France, the #3 EV market in Europe, Tesla registrations dropped 27 percent in July and were down almost 40 percent through the first seven months of this year.

Tesla initially blamed the decrease in sales on manufacturing disruptions linked to changing over production lines for its most important vehicle, the Model Y. Yet the company’s slump has continued even as it has ramped up output of the redesigned car. That, in  turn, has added to concerns that Elon Musk’s polarizing and often politically charged antics have damaged Tesla’s brand, possibly beyond repair.

Dear Elon, Please Accept $29 Billion

How, then, to explain the latest action by the Tesla board of directors, which has just awarded the drug addled Musk a pay package worth about $29 billion? You might think they should be asking him to pay that to the company as partial compensation for destroying the brand, but you have to understand that the board members receive compensation that is about 100 times more than is normal for directors at major corporations. Once you know that, their total lack of integrity becomes easier to understand.

CNN reports that the company sent a letter to shareholders on August 4 that said Musk has “not received meaningful compensation for eight years” and that its “legal efforts continue” to reinstate the 2018 pay package valued at nearly $60 billion that was invalidated by a Delaware court.

“Despite these legal challenges, we can all agree that Elon has delivered the transformative and unprecedented growth that was required to earn all milestones of the 2018 CEO Performance Award,” wrote board members Robyn Denholm and Kathleen Wilson-Thompson. “This growth has translated into immense value generated for Tesla and all our shareholders. Through Elon’s unique vision and leadership, Tesla is transitioning from its role as a leader in the electric vehicle and renewable energy industries to grow towards becoming a leader in AI, robotics and related services,” they wrote.

The pay package is designed to get Musk to pay more attention to Tesla at a time when his interests have wandered away in pursuit of far-right politics, antisocial media, microdosing on horse tranquilizers, and being the most prolific procreator in his social circle. One might think being the largest individual shareholder would be enough, but apparently not.

Will Elon really return to work full time at Tesla? The gang here at CleanTechnica is highly skeptical. We think Elon has put Tesla on the road to a long decline and that, within a year or two, it will be selling off factories that it no longer needs. Stay tuned.