is transportation editor with 10+ years of experience who covers EVs, public transportation, and aviation. His work has appeared in The New York Daily News and City & State.
Tesla released its second quarter financial earnings today, offering the latest evidence of the damage Elon Musk’s political activities have done to his flagship company.
Tesla said it earned $1.17 billion in net income on $22.5 billion in revenue. That’s above Wall Street expectations of $22.3 billion but represents a 12 percent decrease year over year compared to $25.5 billion in revenue in Q2 2024.
The company’s profits also slid dramatically, logging a 16 percent decrease in net income for the second quarter year over year. And Tesla’s automotive revenue — the money it earns from car sales — slid 16.6 percent year over year, from $19.9 billion in Q2 2024 to $16.6 billion in this most recent quarter. The sale of $439 million in regulatory credits once again buoyed Tesla’s finances — though those are expected to dry up soon after congressional Republicans approved President Donald Trump’s plan to zero out fines for automakers who exceed fuel-efficiency targets.
The company’s profits also slid dramatically, logging a 16 percent decrease in net income for the second quarter year over year.
The earnings comes on the heels of another terrible quarterly sales report for the company. Tesla said it delivered a total of 384,122 vehicles, a 14 percent decline compared to Q2 2024. (For a direct-to-consumer company like Tesla, deliveries are a proxy for sales.)
Tesla said its operating income decreased 42 percent year over year to less than $1 billion, with almost half coming from the sale of regulatory credits to other automakers (again, revenue that is expected to almost vanish in the months to come). Tesla’s cash pile decreased by $200 million in Q2 to $36.8 billion, and free cash flow (or the amount of cash the company has generated after accounting for its day-to-day operating expenses and capital expenditures) was at just $100 million. Some analysts predict that Tesla’s free-cash flow could actually turn negative later this year, which could trigger a steep drop in share price.
In its report, Tesla said it has completed “first builds of a more affordable model in June, with volume production planned for the second half of 2025.” These affordable models are expected to be stripped down versions of the Model 3 and Model Y, rather than a new vehicle program altogether, which is what many investors had hoped for. The company said it also is continuing to develop both the Tesla Semi and Cybercab, which are expected to enter volume production in 2026.
Tesla also gestured at the economic uncertainty caused by the Trump administration’s trade war, as well as “political sentiment” that has turned its brand toxic for many customers. That said, the company failed to mention politics or Musk’s growing unpopularity in its reasons for the drop in revenue, instead citing falling sales, lower regulatory credit revenue, a reduced average vehicle selling price, and decline in energy generation and storage revenue.
After years of exponential growth, the sudden reversal in Tesla’s fortune has left many investors and supporters with whiplash. Tesla now serves as a sobering example of what happens when a company is left on autopilot (or Autopilot, as it were) while its high-profile CEO gets distracted by questionable side quests.
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