Tesla is facing more trouble after reporting a big drop in profits and sales in the second quarter of 2025.
On Wednesday, the electric vehicle (EV) maker shared that its adjusted net income fell to $1.4 billion — a sharp 23% drop from the same time last year.
At the same time, total revenue also dipped by 12%, with sales of its core car business falling even more at 16%.
According to CNN, Tesla's profits went down faster than its sales, which dropped 13.5% from the previous year. The company earned $500 less on each vehicle, bringing in about $42,231 per car.
The company's most popular models — the Model Y and Model 3 — saw a 12% sales drop. Sales of more expensive cars like the Cybertruck fell even harder, dropping 52%.
This news sent Tesla's stock down by 2% in after-hours trading.
Many believe that one big reason for the sales slide is growing dislike for CEO Elon Musk's political views.
Others point to rising competition from companies in China and older carmakers entering the EV space.
Elon Musk’s Tesla posts steepest sales decline in over a decade as EV demand slumps https://t.co/nbqE7056pz pic.twitter.com/K651kbX71S
— NY Post Business (@nypostbiz) July 23, 2025
Tesla Sales Drop for 7th Straight Quarter in California
Even in places like California — the largest US EV market — Tesla is losing ground. In the last quarter, Tesla had over 41,000 new vehicle registrations in the state, which was down 21% from the year before.
That marked the company's seventh straight quarter of falling sales there.
Globally, Tesla's deliveries dropped 13% for the quarter, and analysts now expect the company to see a full-year sales decline for the second year in a row — something that was once rare for the fast-growing brand, Bloomberg said.
To make matters worse, a US tax credit worth $7,500 for EV buyers will end in October. This could force Tesla to lower prices even more, squeezing profits further.
There's also the looming end of emissions credit sales, a business that's earned Tesla $11 billion since 2019.
These credits helped Tesla stay profitable in the past, but recent government changes mean that money may soon disappear.
CEO Elon Musk didn't spend much time on the earnings drop during the company's call with investors. "We probably could have a few rough quarters," he said. "And I'm not saying we will, but we could."
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