Net Profit Drops 46%, Executive Exodus: Tesla's Transformation Faces Test

When Tesla faces a performance setback, revenue, net profit, and global deliveries all experience historic declines, and key management changes accelerate.

Recently, Tesla Vice President Raj Jaganathan announced his departure on LinkedIn, ending a 13-year career at Tesla. Around the same time, Tesla’s AI company xAI also saw its founding team collectively leave.

Public information shows that this senior programmer with 23 years of experience joined Tesla in 2012 from an Indian software company, initially responsible for server development to ensure stable operation of data centers and network applications. Starting in 2018, he was promoted to senior cloud platform manager and director, and in January 2025, he was officially promoted to vice president, overseeing AI infrastructure and information security.

Notably, in fall 2025, after North American sales director Troy Jones left, Jaganathan was temporarily appointed “firefighter,” taking on the role of North American sales head. During this period, he attempted to push automation reforms in customer service but failed to reverse the sales decline—Tesla’s U.S. sales reached 589,000 units in 2025, down 7% year-over-year.

“Summarizing 13 years in one post isn’t easy. My Tesla journey has been like an ongoing evolution,” Jaganathan expressed gratitude in his statement, also revealing that he led the design, construction, and operation of the world’s largest AI cluster, calling this experience a “watershed moment in my life.”

However, his departure is not an isolated case. Over the past two years, Tesla has lost several key executives: Senior Vice President Drew Baglino; Vice President of North American and European manufacturing operations Omeid Afsar; North American HR head Jenna Peruya; AI strategy head Milan Kovacic; and head of software, David Lauck.

Talent attrition at Tesla has also spread to another core company under Elon Musk, xAI. In February, co-founder Wu Yuhui announced his departure on social media. Wu holds a PhD from the University of Toronto, studied under “AI godfather” Geoffrey Hinton, and previously worked at DeepMind and OpenAI. Less than 24 hours later, his doctoral advisor and fellow xAI co-founder Jimmy Ba also announced his departure.

Public records show that of the 12 co-founders of xAI when it was established in 2023, six have left, with five leaving in the past year alone. In response to this ongoing wave of departures, Musk responded on his social platform that “rarely do personnel departures cause regret.”

Behind this wave of executive departures is Tesla’s most severe performance pressure since its founding.

Tesla’s 2025 financial report shows that total revenue for 2025 was $94.827 billion, down 3% year-over-year—the first annual revenue decline in the company’s history; net profit was $3.794 billion, a 46% plunge; global deliveries reached 1.636 million units, down 8.6%, marking the second consecutive year of sales decline and the largest annual drop ever. For the first time, BYD (002594) surpassed Tesla with 2.257 million pure electric vehicle sales, losing its title as the world’s best-selling electric vehicle brand.

Regionally, the decline is even more pronounced. Although Tesla has not disclosed regional breakdowns, the European Automobile Manufacturers Association (ACEA) data for the first 11 months of 2025 shows a 39% year-over-year drop in new car registrations for Tesla in Europe.

China’s market also suffered. According to the Passenger Car Association, Tesla’s retail sales in China in Q4 2025 were about 180,000 units, down 5% year-over-year; for the full year, retail sales reached 626,000 units, down 4.8%. As a key manufacturing and sales hub globally, the decline in China further intensified overall performance pressure.

To counteract the sales slump, Tesla launched multiple promotional strategies over the past year. In China, on March 15, 2025, all Model 3 and Model Y prices were reduced, with discounts up to 150,000 yuan; on September 1, the Model 3 Long Range Rear-Wheel Drive version price was cut by 10,000 yuan; on September 14, the Model Y rear-drive and high-performance versions were reduced by 28,000 yuan and 20,000 yuan respectively. Similar price cuts were implemented in Europe and the U.S., but they failed to reverse the downward trend.

Entering 2026, promotional efforts intensified. On January 6, Tesla China announced a 5-year zero-interest financing plan for Model 3, Model Y, and Model YL, with down payments starting at 79,900 yuan for Model 3 and Y, and monthly payments as low as 1,918 yuan; for Model YL, down payments start at 99,900 yuan with monthly payments as low as 2,947 yuan. They also offered a 7-year ultra-low interest plan covering all main models. However, frequent price reductions led to diminishing returns from “price-to-volume” strategies, and sales continued to decline.

Product strategy adjustments also failed to boost performance. In January, Musk announced the discontinuation of the Model S sedan and Model X SUV, leaving only Model Y, Model 3, and the Cybertruck pickup in the lineup. The next new vehicle, Cybercab (a steering-wheel-free, two-seat autonomous driving model), is planned for production this year.