Tesla shares experienced a significant drop on Thursday after the company reported a decline in second-quarter automotive sales compared to the previous year. Shares fell 8% following the announcement. CEO Elon Musk warned analysts of potentially challenging quarters ahead due to the expiration of federal electric vehicle tax credits and rising competition, especially from low-cost Chinese EV manufacturers.
The electric vehicle maker reported a 16% year-over-year decrease in automotive revenue, amounting to $16.7 billion. Total revenue also fell by 12% to $22.5 billion, falling short of the average analyst estimate of $22.74 billion. Earlier in July, Tesla reported a 14% year-over-year decrease in vehicle deliveries for the second quarter, totalling 384,000 vehicles. In Europe, new car registrations for Tesla also declined last month.
Concerns are growing among investors as they anticipate the release of a more affordable EV model to stimulate sales. Limited production of this new model commenced in June, with expectations to ramp up production during the second half of the year. However, Tesla has not provided official guidance for the remainder of the year, diverging from earlier statements indicating growth in 2025.
Adding to the challenges, Musk’s political activities have also drawn attention. Tesla shares have fallen 24% this year, making it the worst-performing stock among major technology companies.
