Tesla’s financial position is getting worse as the fallout continues from CEO Elon Musk’s politics.
The electric automaker reported Wednesday that both revenue and profits fell in the second quarter of the year compared with a year ago. It’s the second straight negative earnings report from the company, which has suffered damage to its brand and become a lightning rod for street demonstrations.
While Tesla is still the No. 1 seller of electric vehicles in the United States by a wide margin, the earnings report shows a deteriorating situation with no obvious quick fix for Musk, the world’s wealthiest person.
On a conference call with analysts, Musk laid out aggressive plans to try to expand Tesla’s nascent robotaxi service beyond its limited service area in Austin, Texas. He said he wants to make self-driving Tesla taxis available to half the U.S. population by the end of the year — an extremely ambitious goal that he acknowledged depends on both regulatory approvals and the service’s safety record.
Tesla’s Austin robotaxi service is small and still uses human safety observers in the vehicles, putting Tesla far behind Google spinoff Waymo, the market leader in robotaxis.
Musk said the success of the service was critical to the future of Tesla. He said he wanted to focus next on California, Arizona and Florida.
“Autonomy is the story,” he said on the call.
The stock price of Tesla dropped sharply Thursday, declining about 8% in morning trading. It is now down more than 36% from its December high.
Revenue was $22.5 billion for the three months ending June 30, down 12% from a year ago, while earnings were 40 cents per share, down 23% from a year ago.
Tesla said in a note to investors that the quarter was a “seminal point in Tesla’s history: the beginning of our transition from leading the electric vehicle and renewable energy industries to also becoming a leader in AI, robotics and related services.”
Musk has angered people across the political spectrum this year, first with his embrace of far-right politics and his chain saw-wielding tenure as an adviser to President Donald Trump and then when he and Trump had a high-profile falling-out. Musk has vowed to start a political party but so far has not followed through in any visible way.
The earnings report covers Tesla’s finances for April, May and June — a period that overlapped with Musk’s tenure in the White House. Musk left his government job May 30.
Tesla had already warned this month that vehicle deliveries were sagging, down 14% in the second quarter from a year ago. It was the second straight quarter of falling deliveries as Tesla faces not only damage to its brand but also increasing competition, including from Chinese electric vehicle makers.
Musk has tried to keep shareholders happy with developments on other fronts, including by trying to launch a robotaxi service in Austin. Musk has also hyped humanoid assistants as a future potential Tesla product, but none have shipped. On Monday, Tesla opened a diner and drive-in in West Hollywood, California.
Musk talked up the diner — and threw some shade toward Los Angeles — on the conference call Wednesday.
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“It’s sort of a shiny beacon of hope in an otherwise bleak urban landscape,” he said.
Musk and Vaibhav Taneja, who is Tesla’s chief financial officer, declined on the conference call to provide many details about how the Austin robotaxi service is going. Taneja said in response to an analyst’s question that the service has a “handful of vehicles right now” and that it had 7,000 miles of operating experience. That comes out to about 226 miles per days since the June 22 service launch.
Musk’s companies are increasingly intertwined. He merged his social media app, X, with his AI startup, xAI, in March, and his rocket company, SpaceX, is an investor in xAI. This month, Tesla began integrating xAI’s chatbot, Grok, into Tesla vehicles, days after Grok went on neo-Nazi tirades. Musk has said that while he does not support merging Tesla and xAI, he will put a potential Tesla investment into the company up for a shareholder vote.
Wall Street analysts had expected Tesla revenue of $22.74 billion and earnings per share of 43 cents, according to an average of estimates compiled by LSEG.
Musk is deeply unpopular with the American public, with 58% having unfavorable views of him and 33% having favorable views, according to a polling average run by statistics writer Nate Silver.
And more protests are on the horizon. “Tesla Takedown” demonstrations continue to happen weekly, and more than 30 such protests are planned for this weekend, according to a public schedule of the events. A demonstration is scheduled for Saturday at the newly opened Tesla Diner.
Tesla Takedown, an organization behind many of the protests, took note of the poor financial results Wednesday and said the company is overvalued.
“Sooner or later, investors will wake up to the truth: Tesla is nothing but smoke, mirrors, and missed deadlines,” the group said in an emailed statement.
Tesla also faces legal and regulatory headwinds. In Miami and Oakland, California, two separate legal proceedings are examining whether Tesla overstated the capabilities of its driver-assistance software programs, which the company calls Autopilot and Full Self-Driving.
Regulators with the National Highway Traffic Safety Administration are also investigating Tesla's Full Self-Driving systems and whether they are safe to use in fog and other situations with reduced visibility.
The Trump administration has created additional challenges for Tesla by imposing unpredictable tariffs and eliminating environmental regulatory credits, a crucial source of revenue for Tesla.
