Tesla daily: California subsidy snapped up; China sales crown lost; headlight recall; FSD in Switzerland
Tesla used up California's MyFirstEV subsidy in 5 days and its sales jumped week on week (confirmed by CARB), which confirms that car sales are being driven by subsidies and promotions rather than a genuine recovery in demand. In China, the Geely Xingyuan took the sales crown at about 1/3 of the price, pushing Model Y into second place.
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Price-war leadership has spread from BYD to Geely, and with no low-priced model to compete, Tesla faces a deepening structural headwind. A physical NHTSA recall covers 20,349 Model 3 and Model Y cars whose headlights are too bright (26V507, supplier Marelli), adding to the quality-control noise from Fremont. FSD (Supervised) has launched in Switzerland, one more country in Europe's step-by-step rollout (incremental, not a catalyst). TSLA is up about 4% over 5 days but still down 26% this year, at a forward P/E of about 347x. Fundamentals (Q2 automotive gross margin 16.3%, operating margin 1.4%, negative FCF) remain detached from a share price propped up by long-dated AI optionality.
Key evidence
- California's MyFirstEV first-time buyer subsidy ($3,500 on a new car) went live on 3 Aug. Tesla's allocation was fully claimed within 5 days, with 50% claimed in the first 3 days (Sawyer Merritt's count)
- CARB spokesperson Buckley formally confirmed that the 'referenced car company' is Tesla, and that Tesla reported a sharp week-on-week jump in sales to the state after the subsidy went live
- The subsidy's price cap excludes Rivian and Lucid but not Tesla, meaning Tesla's cars are cheaper
- Background: the $7,500 federal EV credit expired in September 2025, and EV demand has weakened across the US
- China passenger car sales ranking (Autohome/Seeking Alpha, 6 months to July): the Geely Xingyuan took first place and Model Y slipped to second
- Price gap: the Xingyuan starts below RMB 100,000 (about $14,820), while Model Y costs RMB 263,500 to RMB 313,500 (about 3 times the price)
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- Several BYD models made the top 10, but its overall sales fell. It was the cheaper Geely Xingyuan, not BYD, that knocked Model Y off the top spot
- NHTSA recall 26V507: 18,735 Model Y (2020-2023) and 1,614 Model 3 (2017-2023), 20,349 cars in total
- Low-beam brightness exceeds the federal limit (as early as 2024 some models were found to be more than double the permitted level). The supplier is Marelli. This is a physical recall that needs a service visit, not an OTA fix
- Quality-control noise from Fremont is building at the same time: an NHTSA investigation into front suspension links, and the admission on the Cybertruck PCS
- On Thursday 13 Aug Tesla officially launched its first FSD (Supervised) ride-along demonstrations in Switzerland
- This continues the country-by-country grind after the Netherlands, Denmark, Belgium and Norway, in parallel with the EU-wide vote on 6 Oct
- TSLA is up about 4% over the last 5 trading days (heading for a 5th straight gain) but still down about 26% this year
- Forward P/E about 347x; FSD take rate on new North American cars 55% (11 Aug data)
- Most of the 28 analysts stay at Hold; Q2 automotive gross margin 16.3%, operating margin 1.4%, FCF negative
Catalysts to watch
- Expiry of the $7,500 federal EV credit in September 2025: the demand vacuum once subsidies fade is the clearest window to watch
- EU-wide vote on FSD (Supervised) on 6 Oct: single-country wins are incremental, and only EU-wide approval would be a catalyst
- Low-priced Chinese rivals such as the Geely Xingyuan keep ramping up volume, the path by which Model Y's share in China keeps eroding
Risks
- Demand: sales driven by subsidies and promotions, not a real recovery; risk of a sales cliff once the federal credit is gone
- China: no low-priced model to take on the Geely Xingyuan ($14,820 against $37k-plus for Model Y); the structural headwind in the domestic market is deepening
- Quality: the physical recall of Marelli headlights, on top of the front suspension link investigation and the Cybertruck PCS issue. Consistency flaws at Fremont are piling up
- Valuation: a forward P/E of 347x against Q2 automotive gross margin of 16.3%, operating margin of 1.4% and negative FCF. Fundamentals are detached from a share price propped up by long-dated AI optionality
Sources (5)
- Official confirmation from CARB spokesperson Buckley ('referenced car company' is Tesla)
- Sawyer Merritt's count of California subsidy claims
- Autohome and Seeking Alpha China passenger car sales ranking (6 months to July)
- NHTSA recall number 26V507
- Tesla announcement of the FSD (Supervised) launch in Switzerland (13 Aug)
A brief is a lead for our research, not a verified conclusion or advice.