Tesla posted a year-on-year decline in revenue and profit for the second quarter of 2025, though results marked an improvement from the first quarter’s sharper slump. The electric vehicle maker reported $22.5 billion in total revenue for the three-month period ending June 30, down 12% from a year earlier, while net income fell 16% to $1.17 billion.
Revenue from vehicle sales – Tesla’s largest segment – totalled $16.66 billion, a 16% drop compared to Q2 2024. Energy generation and storage sales, which include solar roofs and battery storage systems, declined 7% year-on-year to just over $1.5 billion. Only Tesla’s “Services and other” category posted a gain, up 17% to $3.05 billion.
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The company’s operating margin improved to 4.1%, up from 2.1% in Q1, but remained below the 6.3% margin reported in the same quarter last year. Tesla had previously recorded margins as high as 19% in 2022 but has repeatedly lowered prices in recent quarters to maintain delivery volumes in the face of softening demand and intensifying competition.
“While we continue to execute on innovations to reduce the cost of manufacturing and operations, over time, we expect our hardware-related profits to be accompanied by an acceleration of AI, software and fleet-based profits,” Tesla said in its shareholder letter. The company also noted that cost-cutting and restructuring measures had contributed positively to results.
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Production and delivery volumes also declined in Q2, with 410,244 vehicles produced and 384,122 delivered. That marks a 13.5% decrease in deliveries compared to the second quarter of 2024, when Tesla shipped nearly 444,000 vehicles. The new and improved Model Y, which went on sale in March, has not yet reversed the trend.
Despite ongoing challenges, Tesla reiterated its long-term strategy of diversification. The company confirmed it had begun early production of a more affordable EV model in June and expects volume manufacturing to begin in the second half of 2025. “We continue to expand our vehicle offering, including first builds of a more affordable model in June,” Tesla said. Details on the model’s specifications and production location were not disclosed.
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Tesla also highlighted the ongoing expansion of its Robotaxi service, launched in June in Austin using modified Model Ys with safety drivers. The firm said it intends to grow the service in California and Arizona, and may roll out in more U.S. cities with “marginal investment.” It added, “Our efforts to refine the Robotaxi offering in Austin are not location-specific and will allow us to scale to other cities quickly.”
Looking ahead, Tesla plans to begin production of its own LFP (lithium iron phosphate) battery cells later this year, though these will initially be used in stationary storage applications rather than vehicles. Meanwhile, the company’s Supercharger network grew by 18% year-on-year, reaching more than 70,000 charging stalls across 7,377 locations worldwide.
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Still, Tesla has again declined to provide a formal vehicle delivery forecast for 2025, citing uncertainty in global trade dynamics, fiscal policy, and consumer demand. “It is difficult to measure the impacts of shifting global trade and fiscal policies on the automotive and energy supply chains, our cost structure and demand,” the company said.
Analyst estimates suggest Tesla would need to deliver over 850,000 vehicles in the second half of 2025 to meet a full-year volume of 1.6 million – around 10% below 2024 levels. The company has delivered approximately 750,000 vehicles in the first half of the year.