• Tesla reports a 12% revenue decline in Q2 2025, marking its steepest drop in over a decade.
• The company’s profits fell 16%, amid concerns regarding CEO Elon Musk's political involvement.
• Sales interpretations have dropped by 13.5% year-on-year, as consumers turn to more affordable competitors.
• Automotive revenue decreased significantly due to falling vehicle deliveries and regulatory credit sales.
• Tesla is betting on robotaxi services and a new affordable model for future revenue growth.

Tesla experienced a significant revenue decline of 12% in the second quarter of 2025, falling to $22.5 billion from $25.5 billion the previous year. This downturn represents the steepest revenue drop for the company in over a decade and comes amidst declining vehicle deliveries and heightened competition from other electric vehicle manufacturers, particularly in China, according to Reuters, NPR, and Al Jazeera.

Alongside revenue, Tesla's profits also fell 16%, resulting in a net income of $1.17 billion. Analysts attribute these financial struggles to a combination of factors, including Musk's controversial political activities, decreased government support, and growing competition, reports CBS News and India Times.

Despite rolling out a refreshed version of its popular Model Y SUV, the company noted a 13.5% decline in vehicle deliveries year-on-year. Further compounding challenges, sales of regulatory credits—previously a significant revenue stream—dropped sharply, impacting overall profitability. The latest reports indicate that revenue from these credits fell to $439 million, from $890 million a year ago, according to Newsweek and CBS News.

In an attempt to recover from these setbacks, Tesla is focusing on developing a more affordable model aimed at a wider customer base and launching a pilot for its robotaxi service in Austin, Texas. Analysts remain hopeful that these initiatives could boost sales moving forward, despite the overall negative sentiment surrounding Musk's recent political controversies, suggest Reuters, India Times, and NPR.