Two Very Different Ways Tesla Could End The Year

I just reported on Tesla’s declining sales in Q2 2025 relative to Q2 of 2024 and Q2 of 2023 in the United States. Tesla sales are down — down, down, down — and that’s even as non-Tesla EV sales are up. Globally, we’ve also seen Tesla sales declining for the past couple of years. The question — quarter after quarter — is whether the US electric car company can rebound and get back to significant sales growth.

As I’ve been seeing more promises from Elon Musk pop up regarding “Full Self Driving” expectations for the end of the year, serious predictions (yet again), it got me thinking that there are really two extremely different ways Tesla could end 2025. And it’s not just a matter or more or less sales; it’s a potentially an existential matter for the company, or a world-changing matter for society. Let’s roll through two different scenarios and just list what could result from these totally different realities.

Tesla Full Self Driving (Unsupervised) rolls out widely and successfully.

• If “FSD Unsupervised” finally sees mass-market rollout — where normal Tesla owners can turn FSD on, take a nap or watch a movie, and fully let their cars drive for them (with all of the liability going onto Tesla) — then, yes, that could be a game changer.
• In that scenario, presumably, demand for Tesla vehicles would shoot through the roof. Tesla would finally stop bleeding sales, and would most likely be able to use all of the production capacity on hand instead, leading to ~30% growth in production and sales compared to the same time period in 2024.
• Sales would surely rise above 500,000 vehicles a quarter at last, and prices and margins would rise.
• Tesla could even start building a new factory finally.
• Additionally, Tesla would make much more money selling FSD to existing and new Tesla owners, boosting the company’s finances significantly and finally providing more real-world justification for the company’s enormous market cap and stock price.
• While there would still be some consumer demand challenges from the models being on the market for such a long time and looking a bit stale, as well as the repercussions from Elon Musk going nutso politically, those would likely be superseded by soaring demand for self-driving cars to such a degree that they wouldn’t be noticeable — or just wouldn’t matter.

Tesla Full Self Driving (Unsupervised) continues to miss timeline targets, isn’t ready for primetime.

• In a very different scenario, if Tesla doesn’t crack the nut on FSD Unsupervised and just continues to deploy it in limited trials with human safety drivers onboard, things could get nasty. Without FSD Unsupervised, what is the big pull that is going to get Tesla sales growth jumping again?
• Tesla will see a surge of sales in Q3 in the United States as people rush to get their cars before the US tax credit for EVs is phased out, but then it will see a big drop in sales in the following quarters. In fact, sales could get really low and concerning in the US in Q3 and Q4. Without a serious catalyst, the loss of the tax credit is surely going to lead to a big hit in Tesla sales. (Ironically, Joe Biden and Democrats revived the tax credit for Tesla, and then Donald Trump and other Republicans Elon Musk helped to elect took away this important subsidy for Tesla vehicle purchases in the USA.)
• Over in Europe, meanwhile, Tesla sales have collapsed and there’s no real sign of a rebound, especially without FSD unsupervised reaching customer cars. And in China, the competition in the auto sector is clearly innovating faster and Tesla could be facing more and more severe consumer demand challenges.
• Meanwhile, Tesla keeps spending more and more money on the central AI hardware and software development that is supposed to deliver FSD Unsupervised at any moment. Those costs have been growing fast in the past year, and it seems like they could weigh down the company to a concerning degree as they keep going up without bearing enough fruit to deliver/sell FSD Unsupervised to consumers and make it all worthwhile.
• Tesla’s gross margin and profits have been weakening as costs have gone up and sales have gone down, but the company has still been making a profit quarter after quarter. That could flip on its head, though, if costs continue to rise and fewer and fewer people are buying Tesla cars.

These are two vastly different possible futures for Tesla and Tesla [NASDAQ:TSLA] shareholders. Which one will it be? Or is there actually some middle ground here that is not nearly as extreme?