Tesla’s profit engine sputtered once more in the second quarter of 2025 (Q2 2025), marking its third straight quarterly decline and raising fresh concerns among investors. The EV giant reported $1.2 billion in earnings from April to June, down from $1.4 billion a year earlier. Revenue also slipped to $22.5 billion from $25.5 billion. The last time Tesla recorded a quarterly profit increase was in Q3 2024.
Automotive revenue which is Tesla’s bread and butter plunged 16 per cent to $16.7 billion. Adjusted net income dropped 23 per cent to $1.4 billion, or 40 cents per share, falling short of Wall Street’s expectations. The company’s regulatory credit revenue, a long-time profit cushion, also took a hit, tumbling 51 per cent to $439 million.
Despite launching an updated Model Y in June, featuring an elegant redesign with precision-sliding aluminium console doors and refined aluminium accents throughout the cabin sales didn’t meet expectations. Global vehicle deliveries dropped by 13.5 per cent during the quarter, underlining deeper issues in Tesla’s growth strategy.
Aluminium continues to play a central role in Tesla’s vehicle design and construction. From body panels and battery pack enclosures to structural casting parts and body shells, aluminium is used extensively to reduce weight, enhance performance, and improve overall efficiency.
The extent of aluminium integration varies by model while some vehicles boast fully aluminium body structures whereas others adopt a hybrid approach that combines aluminium with high-strength steel for optimal strength and cost-efficiency. These material choices are not only engineering decisions but also central to Tesla’s brand identity as a technology-driven, high-performance EV maker.
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Q4 2024 result also reflects loses
Tesla reported a modest 2 per cent increase in revenue year-over-year, rising to $25.17 billion during Q4 2024. However, the company’s core automotive revenue fell 8 per cent to $19.8 billion, down from $21.56 billion in the same quarter last year. Within that, regulatory credits contributed $692 million a figure that’s increasingly less able to cushion broader declines.
Operating income took a hit, sliding 23 per cent year-over-year to $1.6 billion, as Tesla pointed to lower average selling prices across its major vehicle lines including the Model 3, Model Y, Model S, and Model X as a key factor behind the dip.
Net income plummeted 71 per cent to $2.32 billion, or 66 cents per share, compared to $7.93 billion, or $2.27 per share, in the previous year. It’s worth noting that last year’s results were buoyed by a significant $5.9 billion non-cash tax benefit, making the current quarter’s profit picture look even starker in comparison.
Tesla’s slipping momentum isn’t just about economic headwinds.
The company is falling behind in the race for affordability and fresh innovation. While competitors like China’s BYD are rapidly launching new, competitively priced EVs, Tesla has been slow to roll out its long-promised budget models. The recently introduced Cybertruck, once considered a futuristic icon, has so far underwhelmed.
Only 4,300 units were sold in Q2 a sharp 50 per cent drop from a year earlier, according to Cox Automotive.
Adding to investor frustration, Tesla had committed to delivering a new, affordable EV by the end of June. While the company confirmed limited production began last month, full-scale sales are only expected by year-end. Analysts speculate this vehicle will resemble the popular Model Y SUV, but official details remain under wraps.
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CEO Elon Musk pointed to the upcoming reduction of EV tax credits in the US, a cut of up to $7,500 as a key challenge. The policy change will make Tesla vehicles more expensive and potentially dampen demand. Still, Musk struck an optimistic tone, shifting attention to the company’s moonshot technologies, including autonomous driving, robotaxis, and humanoid robots.
He reiterated Tesla’s long-term vision: that self-driving software and services will become the company's primary growth engine. Tesla has already begun piloting a robotaxi service in Austin, Texas, with safety monitors on board, and Musk claims fully autonomous robotaxis will be available for personal use by year’s end. Expansion to San Francisco and other cities is in the pipeline.
Investors, for now, appear cautiously supportive. Tesla’s stock has surged nearly 50 per cent since early April, driven by Musk’s ambitious promises. But the numbers don’t lie robotaxis and humanoid robots are not yet generating meaningful revenue. The traditional car business is still footing the bill, and as Musk admitted, the company “probably could have a few rough quarters” before its sci-fi bets start delivering real-world returns.
Meanwhile, Tesla’s grip on the US EV market is loosening. While it still accounts for nearly half of all new EVs sold domestically, the broader market tells a different story. US EV sales crept up by just 1.5 per cent in the first half of 2025, while China raced ahead with 32 per cent growth and Europe followed closely at 26 per cent, according to Rho Motion.
As global competitors accelerate, Tesla finds itself at a crossroads balancing visionary innovation with the urgent need to keep its core business firing on all cylinders.
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