Tesla Reports Another Drop in Profits, Musk Cautions of ‘Rough Quarters’ Ahead Amid Strategic Shift
Tesla’s financial troubles deepened in the second quarter of 2025, as the electric vehicle (EV) giant posted another drop in both sales and profit, marking its third consecutive quarter of declines. The company’s CEO, Elon Musk, admitted that more “rough quarters” lie ahead, even as he doubled down on Tesla’s future in robotaxis and automation.
The political controversies surrounding Musk — especially his alignment with far-right figures across the US and Europe — continue to affect Tesla’s public image, dampening global demand for its vehicles.
Financial Snapshot: Q2 2025 Performance
- Revenue fell 12% year-over-year to $22.5 billion (€19.1 billion), down from $25.5 billion (€21.7 billion).
- Net income dropped 16% to $1.17 billion (€990 million) or 33 cents a share, from $1.4 billion (€1.19 billion) or 40 cents a share in Q2 2024.
- Adjusted earnings met Wall Street expectations at 40 cents a share.
- Tesla shares dropped 4.4% in after-hours trading following the earnings report.
Brand in Crisis: Political Fallout Damages Tesla’s Image
Forrester analyst Dipanjan Chatterjee commented that Elon Musk’s polarizing persona has severely damaged Tesla’s brand, stating:
“Tesla is now a toxic brand that is inseparable from its leader.”
From the U.S. to Europe, potential buyers are increasingly turning away from Tesla. In markets like Germany, France, and the UK, Musk’s outspoken political stances have alienated key demographics, allowing rivals like BYD and Volkswagen to gain ground and steal market share.
Musk’s Vision: Robotaxis Over Car Sales
On the Q2 earnings call, Musk shifted focus away from EV sales, highlighting Tesla’s investments in robotaxis, autonomous driving software, and robotics. While these futuristic projects remain largely unproven commercially, Musk claimed that the robotaxi service — which began a limited rollout in Austin, Texas in June — could reach half the U.S. population by year’s end, pending regulatory approvals.
“It appears management’s focus will now shift to robotaxis and away from deliveries growth,” noted Morningstar analyst Seth Goldstein, reflecting on the company’s new direction.
Competitive Headwinds
Tesla is facing fierce competition from Chinese EV giant BYD and legacy automakers like Volkswagen, who are capitalizing on Tesla’s declining reputation and political missteps to boost their own EV sales.
With delivery volumes stagnating and public trust eroding, analysts believe the road ahead will remain bumpy — unless Tesla can deliver tangible results from its autonomous vehicle ambitions.