Elon Musk warned that Tesla faces “a few tough places” as electric car manufacturers report their highest revenue decline in more than a decade, but Wall Street forecasts missing due to demand, tariffs and political uncertainty and already uneasy investors shocked.
Tesla’s shares fell 4% in after-hours trading after the company revealed second-quarter revenue fell 12% year-on-year to $22.5 billion, while analysts expected $22.7 billion. Net income fell 16% to $1.2 billion during the same period.
Musk said on the revenue call that the current landscape is a “weird transition period” with U.S. electric vehicle tax incentives, Trump’s transfer trade policy and a growing “regulatory uncertainty around self-driving cars.”
“Does this mean we might have some hard places? Yes, we might be able to do it,” Musk told analysts. “This is not guaranteed, but it makes sense.”
Despite a 50% rally since April, Tesla’s stock price has fallen 12% year to date, suppressed by slowing demand for electric vehicles, intensifying competition in China and high-profile competition from Musk in May.
Some shareholders had hoped Musk would focus on Tesla after rising tensions and political noise with Trump. But those hopes were shattered when the billionaire announced that he would launch a new political movement called the American Party, further cementing his role in partisan politics.
Tesla said in its second-quarter report that it offered 384,122 cars, down 14% from the same period last year, despite improvements in the first quarter of 2025.
The company’s efforts to refresh its best-selling Y SUV have also achieved different results. The updated design is designed to reignite demand, forcing production to temporarily stop, and some customers reportedly delayed purchases of new versions.
Tesla continues to compete more and more in China, where local electric vehicle brands have gained market share and put pressure on pricing and profit margins.
The company faces the challenge of losing key federal interests. Starting in September, the $7,500 tax credit for electric vehicles (the core of the Inflation Reduction Act) will no longer apply to most Tesla models. Meanwhile, President Trump is abolishing the emission fines program and canceling another strategic advantage of Tesla, which has historically sold emission lenders to traditional automakers.
Now, investors are pinning their hopes on Tesla’s Robotaxi plan, which kicked off pilot operations in Texas last month. Musk said the company’s goal is to get robots to half of the U.S. population by the end of the year.
Tesla head targeted competitors in a typical form, claiming that Tesla led the independent technology. “It is important to note that Tesla is by far the best in the real world,” Musk said. “Our opponents are sitting there with eggs sprinkled on their faces.”
Despite insufficient results and imminent policy headwinds, Musk insists that the company is still continuing the course.
“So far, in 2025, we have done what we say we are going to do, even if not always on time,” he said.
As Tesla enters a critical stage in its evolution, the combination of political entanglement, diverting incentives and growing competition threatens much more of the rest of 2025 than shareholders hope.
