Tesla has been improving its FSD features since introducing it in 2016
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Previously, the Tesla X account shared a video where FSD V12 appeared to consider a pedestrian’s hand gestures when navigating. Elon Musk also confirmed on X that hand gesture recognition would be improved in V12.4, and even better by V12.5.
Tesla has had plans for gesture recognition for many years, with Musk mentioning hand gesture recognition in 2021. FSD is supposed to be able to adapt to new and unique circumstances in a safe manner, whether following instructions from a police officer, or understanding the hand signals from a cyclist.
Boris Johnson and FSD
Boris Johnson, the ex-Prime Minister of the UK, recently got to experience FSD V12 in the crowded streets of LA, with his wife and child in the backseat. Tesla provided a vehicle and assistant for his self-driven experience through 5-road intersections, heavy traffic, and pedestrians.
At the end of about 45 minutes I feel like a driving test examiner – except that I want to tell the car that it has passed, with flying colours. -Boris Johnson
Gestures coming soon
Johnson had a single experience with hand gestures in his drive – being waved at a hotel. While the car didn’t recognize the gesture – even on FSD V12.3.6 – the Tesla official in the vehicle confirmed that “‘It doesn’t yet recognise that gesture, but we are fixing it for the next iteration. It should be done next month.”.
It’s not immediately clear whether the Tesla employee is referring to FSD v12.4, which is expected to start rolling out to the public later this week, or Tesla’s next major FSD release, V12.5. According to Musk, V12.5 is expected to handle much more complicated situations and even start vehicle-to-fleet communication.
Yeah, I wouldn’t count on this in 12.3.x, but 12.4 is a big improvement and 12.5 might nail it
When you’re tackling a problem like FSD, which has never been solved before, you sometimes have to pivot and realize there’s a better approach. That’s what Tesla has done with FSD and AI. Just a few years ago where people thought cars would need to be able to read signs to achieve autonomy, but with the latest approach, there’s no need to. As long as the vehicle has seen a specific sign before and has enough examples, it’s already trained on what humans do when such a sign is found. The same will be true for hand gestures, the vehicle won’t need to know what each hand gesture means, it’ll just recognize that when a current gesture is made, this is how the vehicle should react.
Tesla does this by feeding it millions of examples of very specific situations and AI recognizes patterns. This is an example where Tesla leverages fleet data. They can easily capture millions of examples of hand gestures and how humans reacted, and feed that to their AI training model.
As Tesla processes more video, FSD will continue to improve. Tesla is expected to spend $10 billion on AI this year alone, most of it going toward improving FSD.
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Following the recent departure of longtime deputy Omead Afshar, Elon Musk has stepped up to personally oversee Tesla’s sales operations in North America and Europe, according to a new report from Bloomberg, which cites people familiar with the matter.
This is a big shake-up that places Elon directly in charge of fixing Tesla’s sales slump in two key markets. The move has come as Tesla reported nearly on-the-ball deliveries for Q2 2025, hitting 384k deliveries, against a consensus street estimate of 385k deliveries.
New Leadership Structure
According to the report, Afshar’s former responsibilities are being divided between Elon and Senior VP Tom Zhu. Elon will now directly oversee the sales organizations in the US and Europe. As part of this change, Troy Jones, Tesla’s VP of North America Sales, will now report to Elon.
Tom Zhu, who is based in China, will continue to manage sales in Asia while also taking on the critical new responsibility of overseeing global manufacturing operations. Leadership of Tesla’s factories in Fremont, California, and Texas will now report to Tom. Tesla Energy’s factories will still report to Michael Snyder, VP of Energy and Charging.
For now, we’re unsure whether this is a temporary management structure, if the reporting lines will shift, or if Tesla will either hire or promote a new Senior VP of Sales to cover the duties.
Tackling the Sales Slump
The restructuring is a response to the recent downturn in sales. Analysts estimated that Tesla would deliver approximately 385k vehicles, which they essentially managed to achieve. However, deliveries fell short of production numbers, with Tesla delivering just 373k of the 410k vehicles produced.
This situation is particularly challenging in Central Europe. Europe has been noted as Tesla’s weakest market, according to Elon. Interestingly, Elon previously stated in several interviews over the last few months that there was no demand issue, but it now seems that there have been some issues with growing sales.
With Tesla’s new vehicle registrations across Europe having plunged 37% since the start of this year, and the rollout of the new affordable model, as well as more affordable versions of the Model 3 and Model Y seemingly delayed, there is a lot to do. Some analysts are projecting a second consecutive annual decline in Tesla’s global car sales for 2025.
The Rise of Tom Zhu
A key note in this reshuffle is the return of Tom Zhu to a top global operations role. Tom had previously led the construction and ramp-up of Giga Shanghai and was then promoted to Senior VP of Automotive Operations in 2023. Last year, he was sent back to China to focus on tackling regulatory hurdles with the launch of FSD in China.
His return to overseeing global manufacturing, even while staying in China, is a significant vote of confidence in his abilities. It also comes as Chinese authorities have begun drafting new autonomy guidelines to clear a path for the broader rollout of both Supervised and potentially Unsupervised FSD.
Wrap Up
This major restructuring shows that Elon is once again focused on Tesla and plans to personally tackle the company’s biggest issues. This will require a careful hand, as Elon’s forays into politics have caused self-admitted brand damage. If anyone can turn this around and have the Model Y return as the Best-Selling Vehicle of 2026, having just missed out by a few thousand vehicles to the Toyota RAV4, it is Elon.
Alongside him, Tom Zhu will be responsible for streamlining global manufacturing and ensuring that Tesla is ready to launch their new affordable variants in the near future, which should also make a considerable dent in sales.
Tesla has released its Q2 2025 production and delivery numbers, revealing an improvement in production and deliveries over Q1, but still down from a year ago.
Tesla produced 410,244 vehicles in Q2, nearly equal to their production a year ago, which was 410,831 vehicles. Production for this quarter was significantly up compared to Q1 2025, which only saw 362,615 vehicles produced. While production numbers matched those of a year ago, actual deliveries were down.
Q2 2025 saw Tesla deliver 384,122 vehicles, which was down approximately 59,000 units compared to the same period last year, but up by approximately 48,000 vehicles, or about 14% compared to Q1.
Breakdown by Model
The Model 3/Y segment continues to dominate Tesla’s production profile, accounting for 396,835 units produced and 373,728 delivered in Q2 2025. Deliveries for the “Other Models” category—which includes the Cybertruck, Model S, and Model X—were down compared to the previous quarter, with just 10,394 vehicles delivered, a 20% decline. Compared to a year ago, the drop for these vehicles is even more drastic, with sales being down 52%. Tesla refreshed its Model S and Model X last month with new features; however, the update was much smaller than expected and likely didn’t help much in increasing sales for these vehicles.
Tesla doesn’t break down Cybertruck sales separately, but those deliveries are expected to be down as well.
Tesla noted that 2% of total deliveries this quarter were accounted for under operating lease agreements, consistent with the same quarter last year.
Quarter
Production
Deliveries
Model 3/Y Deliveries
Other Models Deliveries
Lease Share
Q2 2025
410,244
384,122
373,728
10,394
2%
Q1 2025
362,615
336,681
323,800
12,881
4%
Q2 2024
410,831
443,956
422,405
21,551
2%
Context and Market Response
While the numbers exceeded some bearish expectations, the year-over-year delivery drop is Tesla’s second straight quarterly decline. Analysts attribute declining sales to increasing EV competition and reputation issues.
Still, investors found relief in the improved quarter when compared to Q1. The stock rebounded about 4% yesterday on the news.
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