Tesla sees largest quarterly revenue drop in over a decade in Q2 earnings
Tesla revenue slipped 12% year over year in the second quarter of 2025, the company's July 23 earnings release showed.
The Elon Musk-helmed electric car manufacturer took in $22.5 billion in revenue, down from $25.50 billion in the second quarter of 2024. It is the company's largest revenue drop in over a decade, according to Reuters.
The shareholder materials called the quarter "a seminal point in Tesla’s history" noting the company's expansion in artificial intelligence and robotics.
Musk warned on the following earnings call that the company could have "a few rough quarters," as electric vehicle incentives disappear in the wake of the passage of once-Musk ally President Donald Trump's tax legislation.
"Despite a sustained uncertain macroeconomic environment resulting from shifting tariffs, unclear impacts from changes to fiscal policy and political sentiment, we continue to make high-value investments," the materials read.
Musk added that he believes that sales will improve in Europe and China when full-self driving becomes available in the markets, calling the European regulatory hurdles, "Kafka-esque."
"Autonomy is the story," Musk said. "Once you have the physical product the autonomy is what amplifies the value to stratospheric levels."
Musk claims Robotaxi service expanding soon, officials pump brakes
Musk pointed to the start of Robotaxi service in Austin and claimed that the company is on track to gain "regulatory permission" in the Bay Area, Arizona, Nevada and Florida.
He also claimed that the service will be available to "half the population" of the country by the end of the year. "That's at least our goal, subject to regulatory approvals," Musk said.
A spokesperson for the California Public Utilities Commission, which regulates ride-hailing in the state, told Paste BN that the company has not applied for permits beyond the Transportation Charter-Party Carrier permit it already holds in an email Wednesday.
The Arizona Department of Transportation said in a statement that Tesla began the certification process required by the state June 26. Spokesperson Bill Lamoreaux said that the company applied for autonomous vehicle testing and operating with and without a driver with interest in operating within the Phoenix Metro area.
A Nevada Department of Motor Vehicles spokesperson told Reuters that department officials "discussed the process" for beginning autonomous driving in the state with Tesla last week, "but not steps have been taken outside of communication."
Paste BN reached out to the Florida and Nevada motor vehicle departments and did not receive an immediate response.
Personal self-driving software to come soon, claims face lawsuit
The former DOGE frontman claimed that Tesla's full self-driving software, first mentioned in 2015 with a three-year delivery timeframe, would be available for personal use "in certain geographies" by the end of the year.
"I'm confident that by the end of this year, within a number of cities in the US, it'll be available to end users," Musk said, adding that the company is being "very careful about it."
He also claimed that owners will be able to add their cars to a robotaxi fleet "confidently next year."
The comments come as Tesla is entangled with the Golden State's Department of Motor Vehicles, which is pushing for a ruling in an Oakland administrative court that would allow the DMV to suspend sale and manufacturing of EVs in California for at least 30 days – according to the San Francisco Chronicle.
The DMV argues that advertising claims around self-driving technology were misleading, according to the newspaper.
What did Tesla's earnings report say?
Deliveries in the second quarter of 2025 dropped year-over-year, continuing the trend seen in the first quarter. The company delivered 384,122 vehicles in the quarter compared to 443,956 in the second quarter of 2024.
The materials pointed to the start of production for "a more affordable model" in June with large scale production to begin in the second half of 2025.
Tesla saw gross margin slip over a percent year-over-year, landing at 17.2%. The figure is a rebound from its first quarter readout of 16.3%.
A separate pain point for the company was an over 50% decrease in the sale of regulatory credits. Tesla brought in $439 million from the credits in the second quarter compared to $890 million last year.
Tesla additionally reported a nearly 90% drop in free cash flow, going from $1.34 billion in the second quarter of 2024 to $146 million this year.
This story has been updated with new information.