Tesla founder and CEO Elon Musk has been in the spotlight again over recent days. The headlines painted the familiar picture of the billionaire: electrifying yet at the same time polarising. On the one hand xAI, his artificial intelligence firm, won plaudits for a successful funding round, while on the other Grok, the AI flagship, came under pressure due to fake images and inadequate quality control. The same is true for Musk’s biggest baby, Tesla. The once dynamic growth of the maker of electric cars has gone into reverse, with Tesla posting a sharp 15.6% drop in sales in the final quarter of 2025 compared with the same quarter the previous year. Discounting and financing incentives managed to stabilise demand only partially. The weak performance could indicate that the strong sales figures of the third quarter (+7%) were perhaps merely an outlier. Deliveries in 2025 fell by 8.5% overall, so the second year in a row ended in negative territory.
Structural competition in the e-mobility market, increasing price sensitivity and the lack of acceleration in demand in certain regions are hitting not only volumes, but also profits. The bottom line was that earnings per share fell around 30% to USD 0.50 in the last quarter of 2025, compared with analysts’ expectations of a range between USD 0.55 and USD 0.59. Tesla is thus a long way from its former glory. With a current quarterly net profit of USDbn 1.37, the group can only dream of the days it exceeded USDbn 2 or 3, as it did in its 2021/22 heyday. The once double-digit margins enjoyed by the US electric car-maker are likewise nowhere to be seen now: the operating return on sales reaching just 5.8% between July and September.
While market cycles, competition and slimmer margins dominate Tesla’s picture in the short term, in the medium term its prospects remain intact. Scale effects in battery technology, stronger cost control, selective price adjustments and an acceleration of software-based revenue sources could bring Tesla back into the overtaking lane. The diversification strategy also includes investment in AI, fleet services and charging infrastructure. At the same time, CEO Musk has been highlighting the importance of self-driving cars and humanoid robots for a number of years now. Although the charismatic boss has been unable to keep his bold promises in this area – he predicted, for instance, that about 50% of the US population would have access to Tesla’s Robotaxis by the end of 2025 – progress is still being made, with autonomous vehicles available for a limited number of customers in Austin and San Francisco. In addition, this year is to see the start of series production of the Tesla Cybercab, a two-seater electric car without a steering wheel or pedals.
Tesla, then, is and remains a company with short-term challenges and long-term opportunities. This is causing significant fluctuation on the stock market: over the last two years the share price has moved within a wide range between USD 140 and USD 500. This tension between vision and volatility presents investors with a classic question: How can I hold such a highly volatile underlying such as Tesla without relying solely on price gains? That is precisely where the new product from Leonteq comes in. It is not a bet on the next jump in prices that determines the return, but rather the systematic monetarisation of the volatility. The solution, we can already reveal, is called the YieldETP+ on the Tesla 110% Covered Call Index. You can find out more about it in the second part of our investment theme.
Source: Tesla