Tesla Q2 2025 Earnings Highlight FSD Progress Amid Revenue Decline and Market Challenges

Tesla released its Q2 2025 earnings on July 23, reporting adjusted earnings of 40 cents per share, just below the average analyst estimate, alongside revenue of $22.5 billion that fell 12% year-over-year, marking the sharpest decline in at least a decade. Gross margin came in higher than anticipated.

Updated as of 16:56 EST

The company attributed performance to a drop in sales and a reduction in regulatory credits, amid a sustained uncertain macroeconomic environment resulting from shifting tariffs, unclear impacts from changes to fiscal policy and political sentiment.

Shares slipped less than 1% in extended trading in New York, erasing an earlier gain, after the stock’s value had fallen 18% since the start of the year despite rebounding from lows in March and April.

This quarter underscores Tesla’s transition toward robotaxi and autonomous vehicle plans while navigating economic and political headwinds, relevant for EV enthusiasts monitoring industry resilience.

Full Self-Driving Technology Advancements

Tesla drivers have now cumulatively driven over 4.5 billion miles on FSD (Supervised) as of the end of June, up from 2.9 billion at the end of December. This surge aligns with recent product refreshes and rapid improvements in the software.

“Given the recent refreshes in our product portfolio and rapid improvement in FSD (Supervised), it is paramount we maximize the number of prospective customers experiencing our vehicles,” Tesla stated.

Record test drives in North America increased 20% sequentially, with efforts in California, Nevada, and Texas emphasizing this focus.

Tesla continues preparations for a broader release of FSD (Supervised) in China this year, pending regulatory approval. Shanghai Gigafactory remains the main export hub, supporting markets like South Korea, Malaysia, the Philippines, Singapore, and India, where the refreshed Model 3 achieved a 5-star overall safety rating from ANCAP, marking the highest result recorded to date against ANCAP’s 2023-2025 criteria. We continue to prepare for the launch of FSD (Supervised) in China this year, pending regulatory approval.

Vehicle Expansion and Production Plans

Tesla continues to expand its vehicle offering, including first builds of a more affordable model in June, with volume production planned for the second half of 2025. Additionally, we continued development of Semi and Cybercab, both slated for volume production in 2026.

“Our focus remains on prudently growing our vehicle volumes in a capex efficient manner by using our existing vehicle production capacity before building new lines. Plans for new vehicles that will launch in 2025 remain on track, including initial production of a more affordable model in 1H25”

The purpose-built Robotaxi product – Cybercab – will continue to pursue a revolutionary “unboxed” manufacturing strategy and is scheduled for volume production starting in 2026.

Gigafactory Berlin built its 500,000th Model Y. We plan to begin deliveries of Model 3, Model Y and Cybertruck later this year in Saudi Arabia – the first Cybertruck market outside of North America. We continue to prepare for the launch of FSD (Supervised) in Europe this year, pending regulatory approval.

Automotive deliveries totaled 384,122 vehicles in Q2, down 13.5% from 443,956 the year before. Tesla has turned to updates and financing incentives to capture shopper attention, refreshing its popular Model Y crossover SUV, making updates to its luxury Model S and Model X vehicles, and releasing a pared-down, lower-cost version of its Cybertruck.

Energy Sector Growth and Margins

Tesla Energy gross profit reached a record of $846 million in Q2 2025.

Energy storage deployments once again increased on a trailing twelve-month (TTM) basis, including record Powerwall deployments for the fifth consecutive quarter. Gross profit increased sequentially and year-over-year, reaching a record of $846 million. Tesla started deploying Megapacks from Megafactory Shanghai as the ramp continues as planned. Regionalizing energy storage manufacturing capacity is critical for meeting demand given shifting tariff, trade and fiscal policies globally.

Energy Generation and Storage revenue reached $3.04 billion, up 176%. Services and Other gross profit grew 64% sequentially, partly due to improved Supercharging gross profit generation from increased volume. We added over 2,900 net new Supercharging stalls, growing the network 18% year-over-year.

Tesla said its declines in revenue and profitability were due to the drop in sales and a reduction in regulatory credits.

Robotaxi and AI Infrastructure Developments

Tesla on their Robotaxi service:

“We will further improve and expand the service (more vehicles covering a larger area, eventually without a safety rider) while testing in other U.S. cities in anticipation of additional launches. Our efforts to refine the Robotaxi offering in Austin are not location-specific and will allow us to scale to other cities quickly with marginal investment.”

We achieved the world’s first autonomous delivery to a customer with a new production Model Y driving itself ~30 minutes from the factory across town to its new owner’s home, including on highways. We expanded AI training compute with an additional 16k H200 GPUs at Gigafactory Texas, bringing Cortex to a total of 67k H100 equivalents.

In June, Tesla launched a small fleet of robotaxis near its headquarters in Austin, Texas. The rideshare app is currently restricted to the downtown and South Congress neighborhoods. Access is by invitation only and priced at $6.90 a ride, up from $4.20 a few weeks ago. Musk said Tesla plans to expand its service to the Bay Area by fall.

The rollout marked a milestone for the company’s self-driving taxi aspirations, but limitations placed on the vehicles and a series of apparent miscues suggest the technology remains far from wide adoption, some analysts previously told ABC News.

Tesla AI training capacity ramp through end of September (H100 equivalent GPUs).

Tariff and Political Implications

Tesla on tariffs:

“While the current tariff landscape will have a relatively larger impact on our Energy business compared to automotive, we are taking actions to stabilize the business in the medium to long-term and focus on maintaining its health.”

The company faces more headwinds going into the third quarter as the federal government rewrites policies around EV incentives, eliminating the $7,500 consumer tax credit, as well as many of the valuable carbon credits paid by other car manufacturers to Tesla to offset the sale of gasoline-powered vehicles.

Tesla’s brand has become increasingly polarizing following Musk’s support of President Donald Trump. During his brief role helping the administration, Musk’s attempts to slash government spending generated criticism from many of Tesla’s traditionally left-leaning consumers, while some investors worried the project was a distraction. A number of analysts have adjusted their expectations downward in recent weeks.

Musk has encouraged investors to focus their attention on future revenue streams stemming from its investments in autonomous vehicles and robotics.

Tesla’s finances have been in a freefall since last fall, after Chief Executive Elon Musk’s entrance into partisan politics brought protests and worsened the company’s reputation in once-popular regions like California and Europe. Musk’s departure from the Trump administration in May and subsequent public disputes with the president have further complicated his relationship with car buyers, who have more options than ever when shopping for an EV in both the US and China.

Tesla has faced heightened competition from domestic and foreign carmakers rolling out electric vehicles. Chinese EV-maker BYD outperformed Tesla in total car sales for the first time ever last year.

Tesla marked a production milestone at Gigafactory Berlin, building its 500,000th Model Y. The company plans to initiate deliveries of the Model 3, Model Y, and Cybertruck in Saudi Arabia later this year, establishing the region as the first Cybertruck market beyond North America.

Tesla also continues preparations for rolling out FSD (Supervised) in Europe this year, contingent on regulatory approval. This expansion signals growing global accessibility for Tesla’s lineup, potentially boosting adoption among international EV enthusiasts while navigating diverse market regulations.

In the energy segment, Tesla remains on schedule to commence domestic U.S. production of its first LFP cells for energy storage products later this year, as illustrated in a shared image of a modern factory line featuring automated machinery and conveyor systems.

On tariffs, the company acknowledged that the current landscape affects its Energy business more significantly than automotive operations.

“While the current tariff landscape will have a relatively larger impact on our Energy business compared to automotive, we are taking actions to stabilize the business in the medium to long-term and focus on maintaining its health,” Tesla stated.

These steps could mitigate economic pressures, ensuring sustained growth in storage solutions like Powerwall and Megapack for users seeking reliable home or grid energy options.

Tesla’s net income plunged 16% in the second quarter, marking further steep declines at the company as automotive sales continue to fall. The electric-vehicle maker also reported adjusted earnings per share of 40 cents, matching analysts’ expectations.

Declines in revenue and profitability were due to the drop in sales and a reduction in regulatory credits. Tesla shares fell more than 1% in after-hours trading on Wednesday, after staying flat ahead of the second-quarter report.

Our lithium refining and cathode production plants remain on track to begin production in 2025, on-shoring production of critical battery materials to the U.S. We are on course to begin domestic Tesla AI training capacity ramp through end of September (H100 equivalent GPUs) production of our first LFP cells for our energy storage products later this year.

Tesla profits fell 16% over a three-month period ending in June that overlapped with the end of Chief Executive Elon Musk’s tenure in the White House and his ensuing public clash with President Donald Trump, an earnings release on Wednesday showed. The fresh data covered a period following the onset of Trump’s auto tariffs in early April.

In a statement on Wednesday, Tesla touted a “strong balance sheet,” but acknowledged a “sustained uncertain macroeconomic environment resulting from shifting tariffs.”

The company also faces “unclear impacts from changes to fiscal policy and political sentiment,” Tesla said.

Tesla is moving forward with its robotaxi and affordable vehicle plans while reporting second-quarter earnings that fell short of Wall Street’s estimates.

Hat tip to Sawyer Merritt.