TLDR
- Tesla missed Q2 earnings expectations with revenue of $22.50 billion versus $22.64 billion expected, marking a 12% year-over-year decline
- The company confirmed production of a more affordable model for the second half of 2025, with first builds completed in June
- CFO warned of limited vehicle supply in Q3 due to the upcoming expiration of the $7,500 EV tax credit
- Tesla stock dropped over 8% in premarket trading following the earnings call
- Robotaxi expansion faces regulatory hurdles, with Tesla only operating a small fleet in Austin currently
Tesla delivered another quarter that left investors scratching their heads. The electric vehicle maker missed both earnings and revenue targets for Q2, posting revenue of $22.50 billion against expectations of $22.64 billion.
The 12% revenue drop from last year’s $25.05 billion tells the story of a company caught between aging products and ambitious future plans. Adjusted earnings per share came in at $0.40 versus the expected $0.42.
TESLA EARNINGS JUST CAME OUT
*TESLA REVENUE $22.5B , ESTIMATE $22.7B ( MISS ❌)
* TESLA EPS $0.40, ESTIMATE $0.42 ( MISS ❌)$TSLA pic.twitter.com/1iDrZcVaOG
— GURGAVIN (@gurgavin) July 23, 2025
One bright spot emerged from the earnings mess. Tesla confirmed it completed first builds of its long-promised affordable model in June. Volume production remains on track for the second half of 2025.
This cheaper vehicle could be crucial as Tesla faces headwinds. The company’s regulatory credit revenue dropped to $439 million from $890 million a year earlier. These credits will continue falling after Congress passed new legislation.
Supply Crunch Coming
CFO Vaibhav Taneja delivered sobering news about the near term. The recent congressional bill will trigger a supply squeeze as customers rush to buy before the $7,500 tax credit expires at the end of Q3.
“Given the abrupt change, we have limited supply of vehicles in the US this quarter,” Taneja said on the earnings call. “We may not be able to guarantee delivery orders placed in the later part of August and beyond.”
Tesla delivered only 384,122 vehicles globally in Q2. That represents a 13.5% drop year over year. The changeover to the refreshed Model Y may have hurt sales, but broader demand issues persist across key markets.
Musk acknowledged the credit expiration could mean “a few rough quarters” ahead. The timing puts pressure on Tesla’s affordable model launch.
The cheapest Tesla currently sells for around $43,000 without incentives. That’s the rear-wheel-drive Model 3 sedan. A $30,000 vehicle remains elusive despite years of promises.
Robotaxi Reality Check
Tesla’s robotaxi dreams face harsh regulatory reality. Musk claimed the company is “getting regulatory permission to launch” in several states including California, Nevada, Arizona and Florida.
He expects to reach “half the population of the U.S. by the end of the year” and scale by the end of next year. The reality looks more complicated.
Tesla currently operates only a small fleet in Austin that isn’t available to the general public. California regulators told Reuters that Tesla hasn’t applied for permits needed to charge passengers for autonomous rides.
The company logged just 562 testing miles in California since 2016. By comparison, Alphabet’s Waymo drove over 13 million testing miles and secured seven regulatory approvals over nine years before launching paid robotaxi service in 2023.
Arizona appears more promising. Tesla applied for permits last month and expects a decision by month’s end. Nevada officials said they discussed the process with Tesla last week but no steps have been taken.
Tesla disclosed in a Thursday filing that regulators have requested information about its robotaxi plans. The scrutiny reflects growing investor focus on these ambitious promises.
“Tesla cannot afford a misstep with the robotaxi service,” said Camelthorn Investments adviser Shawn Campbell. He noted that “the wheels are coming off” the automotive business with sales declines across markets.
Tesla stock fell over 6% in premarket trading Thursday. Shares have declined nearly 18% this year as investors question the company’s $1 trillion valuation.
Gene Munster from Deepwater Asset Management expressed disappointment that Tesla provided no updates on when Austin service would go public or how many vehicles would operate. “It seemed like he wanted to steer clear of really putting hard estimates out there,” Munster said.
Tesla plans volume production of its purpose-built robotaxi starting in 2026. Testing has expanded in Austin with a bigger operating area and likely more vehicles coming.
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