Tesla’s stock tumbled more than 8% on Thursday after CEO Elon Musk warned of “rough quarters” ahead during the company’s Q2 2025 earnings call. The warning, along with weak financial results and vague future plans, triggered investor concern.
Tesla reported adjusted earnings per share (EPS) of $0.40, missing analysts’ expectations and marking a drop from $0.52 a year ago. Revenue fell 12% year-on-year to $22.5 billion, slightly below estimates. Free cash flow dropped sharply to $146 million—an 89% decline compared to the same quarter last year.
The company’s stock remained relatively stable until the conference call, when it started to slide and continued falling in pre-market and cash trading.
Musk Acknowledges Difficult Transition Period
During the earnings call, Musk cited the loss of U.S. EV tax credits and a slow rollout of autonomous vehicle technology as reasons for Tesla’s short-term struggles.
“We probably could have a few rough quarters,” Musk admitted. “But once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I would be surprised if Tesla’s economics are not very compelling.”
Despite promoting long-term plans for robotaxis and AI, analysts and investors expressed frustration at the lack of detail about Tesla’s current product roadmap. The company offered few updates on key projects like its affordable EV or humanoid robot initiative.
Slumping Sales in Europe
Tesla’s challenges are not limited to the U.S. In Europe, vehicle sales dropped 33% in the first half of 2025. In June alone, EU sales fell 40%, and Tesla’s market share across the continent dropped to just 1.6%.
Although a refreshed Model Y helped sales slightly in the UK, demand remained weak in other European markets. Analysts say Elon Musk’s political alignment with far-right parties and support for Donald Trump may have further harmed the company’s reputation abroad.
Musk also criticized recent EV policy changes under the Trump administration, calling the loss of tax credits and relaxed fuel standards a “disgusting abomination.”
Delayed EV Launch and Focus on Robotaxis
Tesla said it has started production of a new, lower-cost EV similar to the Model Y, but its release is delayed until after U.S. tax credits expire in September.
Meanwhile, the company continues to promote its robotaxi project. A pilot service began in Austin, Texas last month, with plans to expand to half of the U.S. by year’s end—pending regulatory approval.
Still, investors are cautious. “All eyes are on how Austin is going to play out, and we didn’t hear much,” said Gene Munster of Deepwater Asset Management.
Concerns Over Leadership and Strategy
Musk also addressed concerns about his leadership after a court decision in Delaware voided his multibillion-dollar compensation package. “My control over Tesla should be enough to ensure it goes in a good direction,” he said, while acknowledging the need for limits.
Critics argue Musk’s attention has shifted away from Tesla’s core car business, and that the company increasingly resembles a traditional automaker rather than a tech innovator.
Financial Highlights
- Adjusted EPS: $0.40 (vs $0.52 last year)
- Revenue: $22.5 billion (-12% YoY)
- Free Cash Flow: $146 million (down 89% YoY)
- Automotive Gross Margin (ex-regulatory credits): 15%
- Supercharger Revenue: Up 17% YoY
- Energy Division Gross Profit: Record $846 million
Tesla did see a 17% boost in revenue from services such as its Supercharger network, and its energy division posted record profits. However, deliveries across most car models declined, with the Cybertruck and others seeing a 52% plunge year-on-year.
