SALES DROP AND SHIFTING EV RULES HIT TESLA HARD

Firm posts dramatic drop in income as rivals up their EV game

- NICK GIBBS

Tesla posted one its sharpest year-on-year declines in revenue, with boss Elon Musk warning that the trend is set to continue through what is expected to be one of the most challenging periods in the EV company’s history.

The key pullout from Tesla’s second-quarter earnings was a 12% year-on-year dip in income to $22.5 billion, which it blamed on a 13% decline in sales (to 384,122) and a 51% (or $441 million) drop in revenue from EV credits, the latter due to a winding down of EV regulations in the US (part of president Donald Trump's ‘Big Beautiful Bill’).

Musk told reporters on the earnings call that Tesla “probably could have a few rough quarters” ahead. His comments resulted in its share price dropping by 7%.

Compounding what was one of the worst days in Tesla’s history, the normally positive commentary from Morgan Stanley analyst Adam Jonas, the company’s biggest champion in the investment community, was not forthcoming.

“Almost no detail on outlook,” he said. “Tesla’s outlook continues to lack any specific targets on revenues or margins. Elon seems to be... exiting the auto industry”.

In his note to investors, Jonas highlighted that Musk was “pulling capital out of the business and doubling down on Al, autonomy and robotaxis”.

Musk has always touted the ‘next big thing’ as he keeps investors enthused about stock of a company that remains the most valuable in the sector based on share price, despite recent setbacks.

However, without cash coming in from car sales, the Tesla project starts to look shaky. The company is still self-financing, but there are clouds on the horizon.

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