Tesla Q2 Earnings Fall, Affordable Model Production Timeline Confirmed Despite Revenue Decline

Tesla delivered underwhelming second-quarter financial results, falling short of analyst expectations for both earnings and revenue. However, the electric vehicle (EV) manufacturer reaffirmed its commitment to launching a budget-friendly vehicle model during the latter half of 2025.

Revenue, Earnings Performance Below Wall Street Expectations

The company generated $22.50 billion in quarterly revenue, missing the Bloomberg consensus estimate of $22.64 billion. This figure represents a significant 12% year-over-year decline from the $25.05 billion recorded in the same period last year.

Adjusted earnings per share came in at $0.40, falling below the anticipated $0.42. Operating income also disappointed at $923 million versus expectations of $1.23 billion.

Regulatory Credit Income Sees Decline

A notable development was the substantial decrease in regulatory credit sales revenue, which dropped to $439 million from $890 million in the previous year. This decline is expected to continue following the implementation of the "One Big Beautiful Bill" (OBBB) legislation.

Affordable Tesla Model Timeline On Track

Despite the financial shortfall, Tesla maintained its production schedule for lower-priced vehicles. "We continue to expand our vehicle offering, including first builds of a more affordable model in June, with volume production planned for the second half of 2025," the company stated.

The automaker also confirmed that its dedicated robotaxi vehicle remains scheduled for mass production beginning in 2026.

During the earnings call, CFO Vaibhav Taneja explained how the recently enacted OBBB would influence Tesla's business operations, creating a "pull forward" effect in sales before the $7,500 tax credit expires at the end of Q3.

"Given the abrupt change, we have limited supply of vehicles in the US this quarter," Taneja noted. "We may not be able to guarantee delivery orders placed in the later part of August and beyond."

Taneja indicated that Tesla plans to accelerate volume production of the upcoming affordable model after the EV tax credit elimination. CEO Elon Musk acknowledged potential challenges ahead, stating that Tesla might face "a few rough quarters" once the credit expires.

Previous Timeline Commitments

In last year's Q2 earnings report, Tesla indicated that production would remain on schedule for new vehicles, including a lower-cost EV, during the first half of the following year.

Currently, no visual representations or specifications have been released for a new vehicle model, particularly one priced around $30,000. Tesla's most economical offering remains the rear-wheel-drive Model 3 sedan, starting at approximately $43,000 before incentives.

Robotaxi Expansion Plans

Tesla has broadened its autonomous taxi testing operations in Austin, Texas, using an expanded operational zone with additional vehicles. Musk announced plans to extend testing to the San Francisco Bay Area, though reports indicate that state permit applications have not yet been filed.

Additionally, Bloomberg reported Wednesday that Tesla is engaged in discussions with Nevada officials regarding robotaxi service testing within the state.