(NewsNation) — Tesla profits fell for the third straight quarter as the EV giant faces increased competition and fallout from CEO Elon Musk’s plunge into politics.
The electric vehicle giant reported a 16% drop in net income in the second quarter, which fell to $1.17B for the April to June period, according to its earnings report released Wednesday.
Revenue also declined, sliding 12% to $22.5B — the sharpest quarterly drop in more than a decade, according to Reuters. Wall Street analysts had estimated $22.6 billion for the quarter, per Bloomberg.
Tesla attributed the revenue decline to a drop in vehicle deliveries, less money from regulatory credit sales and a lower average selling price for its vehicles.
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Still, Musk struck an optimistic tone on Tesla’s post-earnings call and is banking on a rapid expansion of the company’s robotaxi service.
The EV giant began testing its autonomous ride-hailing program in Austin, Texas in June and Musk said the rollout will scale “well in excess of what competitors are doing.”
“I think we’ll probably have autonomous ride-hailing in probably half the population of the U.S. by the end of the year — that’s at least our goal,” Musk said on the call.
Musk said Tesla is currently seeking robotaxi approval to launch in the Bay Area, Nevada, Arizona, Florida and other places, but noted, “we are being very cautious.”
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The company also said it began initial production of a “more affordable model,” with volume production planned for the second half of the year, though it shared few additional details.
“Autonomy is the story,” Musk said.
Musk said Tesla owners in the U.S. could have the option to add their cars to a fleet of autonomous robotaxis as soon as next year, renting them out like an Airbnb.
“It will be a very big deal when people can release their car to the fleet and have it earn money for them,” Musk said.
But until autonomy reaches scale — likely in the second half of next year — Musk warned there could be a “few rough quarters.”
“I’m not saying we will, but we could,” he said.
Wednesday’s weak earnings report comes at a challenging time for the company, which is grappling with intensifying global competition, looming federal hurdles and backlash over Musk’s political activity.
Earlier this month, the company reported a 13.5% year-over-year drop in vehicle deliveries for the second quarter, contradicting Musk’s claims that Tesla was seeing a “major rebound” in sales.
The American automaker is facing stiff competition, particularly in China, where Tesla has lost market share to low-cost local rivals.
Meanwhile, Tesla sales in Europe have taken a hit even as the electric car market continues to grow — a sign the company’s brand may be suffering amid controversy over Musk’s political views. Tesla stores across the U.S. have faced protests in response to Musk’s brief stint with the Trump administration, leading the Department of Government Efficiency (DOGE).
Musk and President Donald Trump eventually had a falling out and the Tesla CEO has since floated the idea of creating a new political party.
Trump’s “big beautiful bill” also poses a threat to Tesla by ending federal tax incentives for EV buyers — perks that have supported the company’s sales for years.
Something else to consider: Tesla may be more insulated from Trump’s tariffs than other automakers since it manufactures its U.S.-sold cars domestically, but it will still face import taxes on imported vehicle components.
Tesla shares fell 3% in after-hours trading.
The Associated Press contributed to this report.
