Elon Musk signals bumpy road ahead as Tesla revenue drops, sales slumps, misses Q2 revenue estimates

Tesla is bracing for a challenging period as it reported a 16% drop in automotive revenue in the second quarter because of lower sales and the CEO Elon Musk even indicated that the EV maker could face "a few rough quarters" ahead, as per a report. The company also missed Wall Street expectations on both earnings and revenue, according to a CNBC report.

Tesla Misses Analyst Estimates on Earnings and Revenue

Tesla posted adjusted earnings per share of 40 cents, which is below the 43 cents estimate from analysts polled by LSEG, as per the report. While Tesla's revenue came in at $22.5 billion, just under the forecasted $22.74 billion, as per CNBC report.

Tesla Stock Drops Following Earnings Call and Executive Comments

After the company reported its second quarter earnings, Tesla shares dropped more than 4% in after-hours trading, particularly after comments from Musk and CFO Vaibhav Taneja highlighted new cost pressures from rising tariffs and the upcoming expiration of a federal electric vehicle tax credit, as reported by CNBC.


Musk acknowledged uncertainty during the earnings call, saying, “We probably could have a few rough quarters. I am not saying that we will, but we could,” as quoted in the report.

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Tesla Automotive Revenue and Regulatory Credit Sales Decline Sharply

Tesla’s automotive revenue dropped to $16.7 billion, down from $19.9 billion in the same quarter last year, as reported by CNBC. Regulatory credit sales also declined significantly, from $890 million last year to $439 million this quarter, according to the report.

Tesla Vehicle Deliveries Drop 14% Compared to Last Year

The company recently reported a 14% year-over-year drop in vehicle deliveries, totaling 384,000 for the quarter, as per the CNBC report. Deliveries are Tesla’s closest approximation of EV sales, although they aren’t precisely defined in shareholder reports, according to CNBC.

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Elon Musk's Reputation Hurts Tesla's Brand Image

Tesla’s poor performance this year is partly because of political backlash in the United States and Europe, as per the report. Musk’s financial support for US president Donald Trump, his endorsement of Germany’s far-right AfD party, and his leadership role in Trump’s government department in the beginning of this year, where he cut federal staff and dismantled aid programs, which affected badly on his firm's image, according to the CNBC report.

Donald Trump Tariffs and Policy Shifts Impact Tesla’s US Supply and Deliveries

Tesla is also adjusting its supply chain due to Trump's tariffs. Taneja said these changes are limiting vehicle availability in the US, warning that Tesla may not be able to fulfill some delivery orders made in late August or later, as reported by CNBC. Taneja said, “Given the abrupt change, we have limited supply of vehicles in the U.S. this quarter,” adding, “We may not be able to guarantee delivery orders placed in the later part of August and beyond,” as quoted in the report.

Federal EV Tax Credit to End, Tesla Warns of Consumer Impact

Adding to Tesla’s hurdles, the recently passed legislation dubbed the “Big Beautiful Bill” will eliminate the $7,500 federal EV tax credit for Tesla vehicles after September, and Taneja pointed out that the “big beautiful bill” recently passed by Congress would affect Tesla’s business, as reported by CNBC.

Tesla Begins Production of Lower-Cost EV With 2025 Launch Target

Despite current setbacks, Tesla is continuing to push forward with future-facing projects, as per the report. In June, the company began early builds of a more affordable EV model, with volume production expected in the second half of 2025, according to the report. The EV maker said in its shareholder deck that it began its “first builds of a more affordable model in June, with volume production planned for the second half of 2025,” as quoted in the report.

Tesla Expands Robotaxi Testing in Austin Amid Competition From Waymo

Tesla is also focused on developing robotaxis and its humanoid robot, Optimus, as per the report. The Tesla CEO has pointed out that Tesla’s robotaxis could work for their owners, making them money while they sleep and the Optimus robots will be so sophisticated that they can serve as factory workers or babysitters, as reported by CNBC.

Meanwhile, the company began testing a robotaxi service in Austin, Texas, in June, which operates in a limited area with a human valet on board and the service is accessible only to select riders, generally Tesla and Musk enthusiasts, as reported by CNBC.

Tesla said in the shareholder deck, emphasizing on its prior statements that, “We will further improve and expand the service (more vehicles covering a larger area, eventually without a safety rider) while testing in other U.S. cities in anticipation of additional launches,” as quoted in the report.

However, Tesla still trails competitors like Waymo, which operates fully autonomous services in several US cities, as per the CNBC report.

Tesla Supercharger Network Grows 18% Year-Over-Year in Q2

Tesla’s services and other segment, which includes its Supercharger stations, reported a 17% increase in gross profit year-over-year, as per the report. Tesla added over 2,900 new Supercharger stalls, marking an 18% growth and bringing the total to more than 7,300 stations worldwide, according to CNBC.

Tesla Stock Down 18% in 2025, Lagging Behind Nasdaq Gains

Tesla’s stock is down about 18% year-to-date, making it the weakest performer among major tech companies, while, the Nasdaq is up around 9% in 2025, as reported by CNBC.

FAQs

How much did Tesla’s revenue drop this quarter?
Tesla's automotive revenue dropped 16%, down to $16.7 billion from $19.9 billion a year ago, as per a CNBC report.

How is Tesla’s stock doing?
Tesla’s stock is down 18% this year, making it the worst-performing major tech stock so far in 2025.