Tesla’s sales fall most for a decade in another rough quarter

Tesla is continuing with its plans for robotaxis and more affordable vehicles, providing some relief to investors. Photo / Getty Images

Tesla Inc fell short of Wall Street’s expectations in one of the carmaker’s worst quarters in years, a sign of the toll that rising competition and a backlash against chief executive Elon Musk have taken on the company.

Adjusted earnings were 40 cents a share, Tesla said yesterday, just below the average analyst estimate. Revenue fell 12% to US$22.5 billion (NZ$37.2b), the sharpest decline in at least a decade.

However, the company said it continued to move forward with its plans for robotaxis and more affordable vehicles, providing a measure of relief for investors. That came “despite a sustained uncertain macroeconomic environment resulting from shifting tariffs, unclear impacts from changes to fiscal policy and political sentiment”, it said.

The revenue drop was due to a decline in vehicle deliveries, lower regulatory credit revenue and a lower average selling price for its cars. Tesla also reported a decline in energy generation and storage revenue. It did, however, see a boost from the business segment that includes its supercharging network.

The shares were little changed towards the end of extended trading in New York. The stock’s value has fallen 18% since the start of the year, though it has largely rebounded from its lows in March and April.

Some investors are looking past its uneven financial results and towards Musk’s promises of a future built around artificial intelligence, humanoid robots and self-driving technology.

“If one thinks Tesla is at its core just an auto business, then the results were poor,” said Adam Crisafulli, founder of the market intelligence firm Vital Knowledge, in a research note. “If one thinks Tesla is an AI/robotics juggernaut, then you will probably feel the same about its prospects after the Q2 release as you did before.”

Polarising brand

Tesla’s brand has become increasingly polarising since Musk’s public support for President Donald Trump. During his brief role helping the administration, Musk’s attempts to slash government spending generated criticism from many of Tesla’s traditionally left-leaning consumers, while some investors worried the project was a distraction. Several analysts have adjusted their expectations downwards in recent weeks.

Revenue from regulatory credits – an area that has become a significant revenue stream for the company – fell more than 26% to US$439 million ($726.1m)in the second quarter. That’s down from US$595m ($984.2m) in the first quarter and US$890m ($1.47b) in the same period a year earlier.

That income is expected to drop sharply as the Trump administration eliminates penalties for carmakers that fail to meet federal fuel economy standards.

Tesla reported gross margin – a gauge of profitability – that exceeded the average estimate.

Investors are still eager for more details on robotaxis’ path forward, including how quickly the service can grow in Austin, Texas, and spread to other cities. The company said it aimed to further improve and expand the service, but did not give timelines or specific locations.

With assistance from Esha Dey.