Tesla’s second-quarter revenue paints a grim picture: falling profits, sluggish sales and reputation hurt.
The all-electric vehicle maker reported net revenue of $1.17 billion, down 16.3% from the same period in 2024. Revenue fell 12% to $22.5 billion from $25.5 billion a year ago, marking the second consecutive decline in Tesla’s profits and revenue this year.
The reason is obvious: Tesla sells fewer cars, lowering prices in pursuit of demand. Delivery volumes fell 13.5% in the second quarter, showing the decline.
Tesla’s trouble is more than economics. CEO Elon Musk has become one of the most polarized figures in the business world. His political hub – paid nearly $290 million to help Donald Trump return to the White House in 2024, later joined the head of Trump’s administration’s efficiency department head (Doge) and exerted strong global opposition. The infamous threshold has begun to actively cut federal agencies’ budgets, sparking protests outside the global Tesla showroom and, more importantly, alienating the company’s core customer base. Musk promoted Liberal buyers in the United States and Europe by becoming an outstanding face in the administration and advocating for the right-wing cause, who once formed Tesla’s support. Sales took a hit.
Musk resigned from Doge in May and refocused Tesla, but the damage persisted. In addition to the drama, he recently formed a new political party, the American Party, which vowed candidates in the 2026 midterm elections after standing out from Trump.
“We may have some hard places. I’m not saying we will, but we can.”
The road ahead looks cruel. President Trump’s “a big bill” signed on July 4 killed the $7,500 federal electric vehicle tax credit as of September 30. This means that the Teslas will become more expensive. The same law would fine automakers clean air for emission standards, ending Tesla’s key revenue stream from selling regulatory credits to competitors. In the second quarter, those credit sales were cut nearly half, down from $890 million a year ago to $439 million.
“There are a lot of changes in a beautiful bill that will affect our business,” CFO Vaibhav Taneja told analysts. Tesla makes most of the U.S. cars in Fremont, California and Austin, Texas, and still relies heavily on imported raw materials and components, making it vulnerable to tariffs.
“We are starting to see the impact of tariffs,” said Taneja. “By the way, the cost of tariffs has increased by about $300 million, which is about two-thirds of the impact of automobiles and other energy sources. However, given the incubation period of manufacturing and sales, the full impact will be created in the next few quarters.”
“Costs will increase in the near term. Although we are trying our best to manage these impacts, we are in an unpredictable environment when it comes to tariffs,” he warned.
A combination of slowing demand, price cuts, disappearing electric vehicle incentives and increased tariffs suggests that Tesla’s revenue pain won’t fade anytime soon. But in Wednesday’s earnings call, Musk reiterated his vision for Tesla’s future, not a car company, but a human robotic robot made as robots and artificial intelligence, automation and autonomous driving technology.
question? Tesla showed off its distance at the late June Robotaxi launch in Austin. Google’s autonomous driving subsidiary Waymo has operated fully autonomous robots in several cities in the United States and covers more than twice the scope of Tesla’s Austin service. Meanwhile, Tesla’s small fleet was only invited and still needed human supervisors in passenger seats.
