10:22 am, July 25, 2025
Electric car maker Tesla saw its year-on-year operating income plummet by 42 per cent in Q2, from $1.6 billion (£1.18bn) to $923 million (£683m), according to the company’s latest earnings statement.
The controversial car maker cited regulatory credit revenue, an increase in operating expenses and Europe’s refusal to allow its self-driving technology as the key reasons behind a decline in profits and vehicle deliveries.
It’s Tesla third consecutive quarterly revenue decline. Tesla also reported a 71 per cent YoY decline in net profit in Q1, which followed an 8 per cent decline in Q4 revenue at the end of 2024.
Earlier this month, Tesla reported Q2 global deliveries of 384,122 vehicles, a 13.5 per cent year-on-year decline.
Although global production of the Model Y and Model 3 increased by three per cent in Q2, production of the Model S, Model X and Cybertruck decreased by 45 per cent.
During its earnings call, Tesla CEO Elon Musk said the sales slump in Europe is partially due to it not being approved to offer its supervised Full Self Driving automated driving feature, which is available to customers in the U.S.
‘So, our sales in Europe, we think, will improve significantly once we are able to give customers the same experience that they have in the US,’ Musk said.
Tesla’s EU sales in April were down 49 per cent YoY, despite battery-electric vehicle sales in the region growing by 27.8 per cent, according to Reuters.
Outside of Europe, Tesla is also dealing with slowing sales in China, which is the world’s largest auto market with the highest volume of EV sales globally.
‘Competitors have used the brand’s decline as an opportunity to catch up with its once-impressive credibility and appeal,’ said Gabor Schreier, chief creative officer at Saffron Brand Consultants. ‘BYD has overtaken Tesla as the world’s largest electric vehicle manufacturer, and Volkswagen has sold more EVs in Europe than Tesla.’
Musk’s close involvement with the Trump administration as the head of the Department of Government Efficiency, along with some of his public statements on social media, has also resulted in a public backlash against the company in some markets.
‘I do think if Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy, it will be the most valuable company in the world,’ said Musk on the earnings call.
