Musk's Tesla sees massive drop in revenue due to strong competition, political controversies
- Alexangel Ventura
- Jul 23, 2025
- 2 min read
Elon Musk's own electric vehicle company Tesla has performed very poorly in its quarter 2 earnings report as it faces pressure from rival EV producers, engulfed in controversy from Musk's political activism.
The company reported a 16% revenue decline in automobile sales, according to the official report from the Tesla company website. This drop was far behind investors' expectations of a roughly 10.3% decline, with the largest prediction being a dip of 13%, according to FingerLakes1.com.
As for energy generation and storage revenues, which Tesla hoped to increase as it expands its nationwide grid of electric vehicle powering stations, revenues fell by 7%, and for services/miscellaneous revenue, a 17% rise was attributed (although this number is much lower than revenues from automobiles, where the biggest drop occurred).
Meanwhile, the company expected to see some breakthroughs in expenses cuts in order to combat the inevitable revenue shortfalls. However, expenses only reduced 1% for operations, not even putting a mark into its growing deficit problem.
As for free cash flow, numbers fell 89% as the company begins to run out of breathing room to make further investments, buy part of its own stock, pay down on its growing debt, etc.
Tesla's similar underperformance in Q2 as in Q1 could be attributed for two reasons.
First and foremost is growing EV competition globally, not just in the heavily dense European market. While Tesla has retreated from Europe since earlier this year, its own home turf of the United States is experiencing greater competition as more companies like General Motors and Ford make the switch from fully-gas models to hybrid and/or fully electric models, putting a major dent into Tesla's once massive market share over EVs. Not only that, but Tesla vehicles have been consistently ranked as more unaffordable than rival electric vehicles like from Volkswagen or Hyundai.
Secondly has been Elon Musk's political controversies, particularly with his divisive rhetoric against both Democrats and Republicans. Musk called for deep spending cuts across key government agencies like USAID and social security, causing a massive Democratic uproar and liberal opposition in the court system. However, after Musk left DOGE leadership and formed the America Party, many pro-Trump Republicans lost trust in Musk. The deteriorating reputation of both Musk and Tesla has at least somewhat contributed to this fall in revenues.
