Tesla's Q2 Results Disappoint: Revenue Down 43% YoY

Tesla reported Q2 results that show substantial deterioration compared to the previous quarter. The company met the consensus earnings per share estimate but many metrics indicate a decline.

Tesla (TSLA) reported its second-quarter earnings on Wednesday, revealing a decline in revenue and earnings per share (EPS) compared to the previous quarter. The company reported revenue of $22.50 billion, missing the $22.64 billion expected by analysts [1]. Adjusted EPS was $0.40, slightly below the $0.42 expected [2].

The company's gross margins improved to 17.2%, beating the 16.5% expected by analysts [2]. This was a positive sign, considering Tesla has been offering generous incentives and lower prices to its consumers. However, Tesla's free cash flow of $146 million fell short of the $760 million expected by analysts [2].

Tesla's revenue from the sale of regulatory credits dropped to $439 million from $890 million a year earlier, due to the passage of the "One Big Beautiful Bill" (OBBB) [1]. This will continue to drop following the bill's passage, potentially impacting Tesla's financial performance.

Despite the earnings miss, Tesla shares were buoyed by the news that the company is in early talks with the state of Nevada to expand its robotaxi service [2]. Tesla's robotaxi service is seen as a potential growth area for the company, and investors hope that it will help offset the slowdown in the core EV business.

Looking ahead, Tesla plans to ramp up production of its "more affordable" model once the EV tax credit expires. The company said that first builds of this model began in June, with volume production planned for the second half of 2025 [1]. However, Tesla warned that it may not be able to guarantee delivery orders placed in the later part of August and beyond, due to limited supply of vehicles in the US this quarter [1].

Tesla's second-quarter earnings report comes at a time when the S&P 500 and Nasdaq are surging to new highs, despite concerns about a global economic slowdown and the impact of trade policies [3]. Tesla's political activism and reputational damage have also been factors in the company's recent struggles, as have the rise of more affordable EVs from competitors [3].

References:

[1] https://finance.yahoo.com/news/tesla-misses-on-q2-earnings-but-says-more-affordable-model-planned-for-2025-production-201633342.html

[2] https://www.tradingview.com/news/zacks:4f8416b70094b:0-tesla-q2-eps-a-mixed-bag-with-bright-spots-in-energy-robotaxi/

[3] https://www.cnbc.com/2025/07/23/tesla-tsla-q2-2025-earnings-report.html