Tesla Posts Largest Quarterly Revenue Drop in Over 10 Years
Tesla has recorded its worst quarterly revenue drop in more than a decade, as CEO Elon Musk's political engagement harms the electric carmaker's reputation.
Tesla's revenue decreased to $22.5 billion for the April-June quarter, down from $25.5 billion the previous year, according to its financial report, which was posted after Wall Street closed. According to LSEG statistics, analysts predicted an average revenue of $22.74 billion.
Revenue from car sales fell by 16%. Tesla attributed the revenue drop to a decrease in vehicle deliveries. Earlier this month, it announced a 14% drop in second-quarter auto deliveries.
Investors are concerned about Musk's ability to devote enough time and attention to Tesla after he clashed with US President Donald Trump by creating a new political party earlier this month. He had vowed weeks before that he would reduce his official workload and focus on his businesses.
Musk's ties to the Trump administration, as well as government layoffs during his tenure as head of the Department of Government Efficiency, harmed the company's reputation in the United States. Meanwhile, the billionaire's support for Germany's far-right AfD party has had an impact on the brand's reputation in Europe.
A string of high-profile senior departures, including the resignation of a close Musk confidant who supervised sales and manufacturing in North America and Europe last month, is also raising worries.
Despite the release of a much-anticipated updated version of its best-selling Model Y SUV, which investors hoped would revive demand, the business reported its second consecutive quarterly revenue loss.
Analysts anticipate that this will keep the company on track for growth in the coming quarters.
"We are at a 'positive crossroads' in the Tesla story: Musk is laser-focused as CEO, Robotaxi/autonomous expansion has begun, demand stabilization has begun, particularly in China, and Tesla is about to embark on an aggressive AI-focused strategy that, we believe, will include owning a significant piece of xAI," Dan Ives, an analyst at Wedbush Securities, said in a note provided to Al Jazeera.
Analysts anticipate that this will keep the company on track for growth in the coming quarters.
"We are at a 'positive crossroads' in the Tesla story: Musk is laser-focused as CEO, Robotaxi/autonomous expansion has begun, demand stabilization has begun, particularly in China, and Tesla is about to embark on an aggressive AI-focused strategy that, we believe, will include owning a significant piece of xAI," Dan Ives, an analyst at Wedbush Securities, said in a note provided to Al Jazeera.
xAI is Musk's AI company, which also produces the chatbot Grok.
"While near-term and this quarter the numbers are nothing to write home about, we believe investors are instead focused on the AI future at Tesla, with a motivated Musk back driving Tesla's future," Ives reported.
Tesla's shares closed the trading day up 0.1 percent, but fell 0.3 percent in after-hours trading.