Tesla CEO Elon Musk speaks alongside U.S. President Donald Trump to reporters within the Oval Office of the White House on May 30, 2025 in Washington, DC.
Kevin Dietsch | Getty Images
At Tesla, vehicle sales are slumping, profits are thinning and revenue from regulatory credit sales are poised to dry up as a consequence of Republican-led policy changes.
Previously, CEO Elon Musk’s futuristic guarantees have convinced investors to look past top and bottom line numbers.
Not now.
Following one other fairly dismal earnings report this week, Musk told analysts on the decision that Tesla’s electric vehicles will soon change into driverless, making a living for owners while they sleep. He also said Tesla’s robotaxi service, which the corporate recently began testing in a limited capability in Austin, Texas, will expand to other states, with a goal of having the ability to reach half the U.S. population by year-end, “assuming we have now regulatory approvals.”
It didn’t matter.
Tesla shares plummeted 8% on Thursday as investors focused on the immediate challenges facing the corporate, including the rapid rise of lower-cost EV competitors, particularly in China, and a political backlash against Musk that harmed Tesla’s brand within the U.S. and Europe.
Automotive sales declined 16% year-over-year within the second quarter for the EV maker, with weak sales numbers continuing in Europe and California. Musk said there may very well be a “few rough quarters” ahead due to EV credits expiring and President Donald Trump’s tariffs.
The stock bounced back some on Friday, gaining 3.5%, but still ended the week down and has now fallen 22% this 12 months, the worst performance amongst tech’s megacaps. The Nasdaq rose 1% for the week and is up greater than 9% in 2025, closing at a record on Friday.
“Look, we love robotaxis. And robots,” wrote analysts at Canaccord Genuity, who recommend buying Tesla’s stock, in a note after the earnings report. “Over time, Tesla is well positioned to learn from these future-forward opportunities.”
The analysts, nonetheless, said that they are focused on the profit and loss statement, writing: “But we love growth too, within the here and now. We’d like the P&L dynamics to show.”
Analysts at Jefferies described the earnings update as “a bit dull.” And Goldman Sachs said Tesla’s robotaxi effort is “still small” with limited technical data points.
Tesla didn’t reply to a request for comment.
Musk, who has previously called himself “pathologically optimistic,” has been in a position to sway shareholders and send the stock soaring at times with guarantees of self-driving cars, humanoid robots and more cost-effective EVs.
But after a decade of missed self-imposed deadlines on autonomous driving, Wall Street is watching Tesla fall behind Alphabet’s Waymo within the U.S. and Baidu’s Apollo Go in China.
In Tesla’s shareholder deck, the corporate said the second quarter marked the beginning of its “transition from leading the electrical vehicle and renewable energy industries to also becoming a frontrunner in AI, robotics and related services.” The corporate didn’t offer any recent guidance for growth or profits for the 12 months ahead.
Regulatory hurdles
Business Insider reported on Friday that Tesla told staff its robotaxi service could launch within the San Francisco Bay Area as soon as this weekend.
But Tesla hasn’t applied for permits that may be required to run a driverless ridehailing service in California, CNBC confirmed. The corporate would first need authorizations from the state’s Department of Motor Vehicles and the California Public Utilities Commission (CPUC).
The CPUC told CNBC on Friday, that under existing permits, Tesla can only operate a human-driven chartered vehicle service, not carry passengers in robotaxis.
Waymo driverless vehicles wait at a traffic light in Santa Monica, California, on May 30, 2025.
Daniel Cole | Reuters
On the earnings call, Musk and other Tesla execs claimed the corporate was working on regulatory approvals to launch in Nevada, Arizona, Florida and other markets, along with San Francisco, but offered no details about what can be required.
Inside Austin, the corporate said its robotaxi service had driven 7,000 miles, and that Tesla has been restricting its robotaxis’ to roads with a speed limit of 40 miles per hour. The Austin service involves a small fleet of about 10 to twenty Model Y vehicles equipped with the corporate’s latest self-driving systems.
The Tesla robotaxis depend on distant supervision by employees in a customer support center, and a human safety supervisor within the front passenger seat, able to intervene if needed.
Compare that to what Alphabet said on its second-quarter earnings call the identical day as Tesla’s results.
“The Waymo Driver has now autonomously driven over 100 million miles on public roads, and the team is testing across greater than 10 cities this 12 months, including Recent York and Philadelphia,” Alphabet said. Meanwhile, Waymo has change into significant enough that Alphabet added a category to its Other Bets revenue description in its latest quarterly filing.
“Revenues from Other Bets are generated primarily from the sale of autonomous transportation services, healthcare-related services and web services,” the filing said. The Other Bets segment stays relatively small, with revenue coming in at $373 million within the quarter.
No matter investor skepticism, Musk is more bullish than ever.
On Friday, the world’s richest person posted on his social network X that he thinks Tesla will someday be price $20 trillion. On the earnings call earlier within the week, he said that relating to AI for cars and robots, “Tesla is definitely significantly better than Google by far” and “significantly better than anyone at real world AI.”
CORRECTION: The Waymo Driver has now autonomously driven over 100 million miles on public roads, based on Alphabet. A previous version misstated the variety of miles.
WATCH: Tough quarter for Tesla
