Tesla's Business in Decline, Says Gerber Kawasaki CEO Ross Gerber

Tesla's business is in decline, says Ross Gerber, co-founder and CEO of Gerber Kawasaki Wealth and Investment Management. Tesla's second-quarter earnings missed expectations, with revenue falling 12% to $22.5 billion. Gerber believes it's sad but inevitable, given the company's struggles.

Tesla Inc. reported a 12% year-over-year drop in revenue for the second quarter of 2025, marking its largest quarterly decline in over a decade. The electric vehicle manufacturer brought in $22.5 billion in revenue, down from $25.5 billion in the same period last year [1].

The company's earnings report, released on July 23, highlighted several challenges. Deliveries fell year-over-year, with 384,122 vehicles delivered compared to 443,956 in the second quarter of 2024. Gross margin also slipped to 17.2% from 16.3% in the first quarter [1]. Tesla saw a nearly 90% drop in free cash flow, from $1.34 billion to $146 million [1].

Elon Musk, the company's CEO, warned that the company could face "a few rough quarters" due to the disappearance of electric vehicle incentives and the uncertain macroeconomic environment. He noted that the company is making high-value investments in artificial intelligence and robotics, which he believes will amplify the value of Tesla's products [1].

Musk also claimed that the company is on track to gain regulatory permission for its Robotaxi service in several states, including the Bay Area, Arizona, Nevada, and Florida. He estimated that the service could reach half the population of the country by the end of the year, subject to regulatory approvals [1].

However, Tesla's business is facing significant challenges. Ross Gerber, co-founder and CEO of Gerber Kawasaki Wealth and Investment Management, commented that it's sad but inevitable given the company's struggles. Tesla's second-quarter earnings missed expectations, with revenue falling 12% to $22.5 billion [3].

The company's traditional carmaking business is struggling in the face of rising competition and continued fallout from Musk's political activities. Investors have largely been willing to look past the sales decline and toward Musk’s promises of a future built around artificial intelligence, robots, and self-driving technology, but the comments show there will be more turbulence before there’s any payoff in these investments [2].

Tesla is also facing regulatory hurdles. The California Public Utilities Commission has not received any applications from Tesla for permits beyond the Transportation Charter-Party Carrier permit it already holds [1]. The Arizona Department of Transportation has begun the certification process for autonomous vehicle testing and operating [1]. The Nevada Department of Motor Vehicles has discussed the process with Tesla but has not taken any steps outside of communication [1].

Musk also reiterated his desire for a greater ownership stake in Tesla, suggesting it should grow in order to prevent his ouster from an activist investor. His multibillion-dollar Tesla payout was gutted by a Delaware judge late last year, and the company is appealing the ruling and has moved its incorporation to Texas [2].

References:
[1] https://finance.yahoo.com/news/tesla-sees-largest-quarterly-revenue-210716601.html
[2] https://www.bloomberg.com/news/articles/2025-07-23/tesla-second-quarter-earnings-miss-wall-street-expectations
[3] https://finance.yahoo.com/video/teslas-business-decline-says-ross-204505038.html