Tesla’s stock crashed over 8% early on Thursday. The EV major has been dealing with several challenges over the past year.
Tesla stock is down close to 20% this year.
Tesla reported weaker-than-expected second-quarter results, missing both top and bottom line estimates, as automotive revenue dropped 16% year-on-year to $16.7 billion.
On the post-earnings call, CEO Elon Musk warned investors that the company “probably could have a few rough quarters” ahead, citing the expiration of federal EV tax credits as a potential headwind.
“I am not saying that we will, but we could,” Musk added.
The company continues to face intense competition in key regions such as China and Europe, particularly from lower-cost Chinese electric vehicle manufacturers.
Fresh data from the European Automobile Manufacturers Association (ACEA) released Thursday showed a decline in Tesla’s new car registrations in Europe for the month of June.
Tesla’s Q2 numbers
Tesla reported a 16% year-on-year decline in automotive revenue in the second quarter, with sales falling for the second straight quarter and once again missing Wall Street expectations.
Revenue from the core automotive segment dropped to $16.7 billion, down from $19.9 billion in the corresponding quarter last year.
The company also saw a sharp decline in revenue from the sale of regulatory credits, which fell to $439 million from $890 million a year ago.
Net income for the quarter fell to $1.17 billion, or 33 cents per share, down from $1.4 billion, or 40 cents per share, in the same quarter last year.
In early July, Tesla reported a 14% year-on-year decline in vehicle deliveries for the second quarter, with total deliveries dropping to 384,000 units.
Analysts on Tesla’s Q2
Wall Street analysts offered mixed views on Tesla following its second-quarter earnings report, reflecting a divided outlook on the company’s near-term headwinds and longer-term innovation potential.
Goldman Sachs maintained a neutral rating but raised its 12-month price target to $300 from $285.
Analyst Mark Delaney said he expects improvements in Tesla’s revenue growth and profitability beginning in 2026.
However, he noted that his estimates for 2025 through 2027 remain below consensus.
“We believe a key focus for investors going forward will be the ability for revenue and profits to reaccelerate, driven by Tesla’s AI-enabled products (e.g., robotaxis, FSD) and new vehicle launches against a more difficult policy environment and given competition,” Delaney wrote.
Wells Fargo reiterated an underweight rating and held firm on its bearish $120 price target.
Analyst Colin Langan said fundamentals are likely to worsen in the second half, even though the company beat on operating margins in the quarter.
His target implies a potential decline of nearly 64% from Tesla’s last close of $332.56.
“Tesla shares are down in post-earnings trading despite a Q2 op margin beat as fundamentals look worse into 2H,” Langan said.
Morgan Stanley, meanwhile, reaffirmed its overweight stance with a $410 price target, suggesting about 23% upside.
Analyst Adam Jonas, a long-time Tesla bull, said the quarter was a “slight beat” with free cash flow near breakeven.
However, he cut his 2025 EPS estimate by 14% on account of weaker delivery forecasts and elevated expenses.
“Tesla is crossing the chasm to autonomy while absorbing slower volume, EV incentive elimination, tariffs and investing in new initiatives that may not make margins for years,” Jonas noted.
Tesla’s struggles in Europe
Tesla’s struggles in Europe deepened in June, with the US electric vehicle maker losing market share for a sixth consecutive month.
According to data published Thursday by the European Automobile Manufacturers Association (ACEA), Tesla’s share of the EU, UK, and EFTA markets declined to 2.8% from 3.4% a year earlier.
New car registrations for the company dropped sharply to 34,781 units in June, marking a 22.9% year-on-year decline.
The data highlights sustained headwinds for Tesla in the region, where it continues to face strong competition from incumbent and Chinese automakers.
The company is also contending with reputational fallout linked to CEO Elon Musk’s increasingly controversial political statements and ties to the Trump administration.
The June decline wasn’t unique to Tesla. Europe’s four top-selling carmakers all reported lower new registrations.
Volkswagen and Stellantis posted year-on-year drops of 6.1% and 12.3%, respectively, while Renault and Hyundai also registered weaker monthly sales.
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