More bad news for Tesla, as expected. The Californian carmaker posted net earnings of $1.17 billion in the latest quarter, a 16% decrease compared with the same period last year. Revenue fell 12% to $22.5 billion, slightly below analysts’ expectations of about $22.7 billion.
On top of sputtering sales comes a significant drop in regulatory credits, which fell by around half to $439 million, making up a substantial portion of Tesla’s $900 million operating income for the quarter, experts say. And these are to dry out completely, as an effect of President Trump’s newly approved One Big Beautiful Bill Act (OBBBA).
Decisive mid-cycle slowdown
Tesla’s Q2 2025 marks a decisive mid-cycle slowdown: revenue, profit, deliveries, and cash flow all declined. Regulatory credits are being phased out, and Chinese and US demand is cooling.
A key factor behind the decline was a 13.5% decrease in deliveries, which fell to 384,122 vehicles. Elon Musk had to warn of “a few rough quarters” ahead, but still believes his robotaxis could make a difference, among other magic potions.
One of the hopeful signs should be a lower-priced Tesla to boost sales again, which currently relies heavily on the Model 3 and especially the Model Y. “We continue to expand our vehicle offering, including first builds of a more affordable model in June, with volume production planned for the second half of 2025,” Tesla says in a press release.
Not the under $25K car
It’s not the ‘under 25,000 dollar car’ which Tesla has promised indefinitely, but never materialized. According to Musk himself, it will not be a completely new model but rather be a more ‘affordable’ Model Y crossover, the brand’s best-selling model today.
Tesla has been teasing the upcoming ‘affordable car’ for months, but how they’re going to manage to make a less expensive Model Y without stripping it completely off, is not clear.
Another lifeline Tesla boss Elon Musk sees for his company remains the robotaxi service it started rolling out in Austin in June. Musk says boldly that his robotaxis will cover half of the US population by the end of the year. It’s not Musk’s first bold statement, and it won’t be the last.
Officially, in the press release, this sounds a little more cautious. “Q2 2025 was a seminal point in Tesla’s history: the beginning of our transition from leading the electric vehicle and renewable energy industries to also becoming a leader in AI, robotics, and related services.”
“Our first Robotaxi service launched in Austin in June. While the service is limited in initial scope, we believe our approach to autonomy – a camera-only architecture with neural networks trained on data from our global fleet of millions of vehicles – allows us to improve safety continually, rapidly scale the network, and improve profitability.”
