Tesla sales slump as electric carmaker faces 2nd year of falling sales

Sales of Tesla vehicles fell sharply in the last three months, plunging 13 per cent in the second quarter over a year earlier.

The electric automaker now needs to deliver more than one million vehicles in the typically strong second half to avoid another annual sales decline. Analysts say it’s a difficult task given tariff-driven economic uncertainty and threats to phase out key EV incentives under the Trump administration’s sweeping tax bill, including a $7,500 US credit on new sales and leases.

Tesla sales fell to 384,122 in April through June, down from 443,956 in the same three months last year. During the latest period, Musk formally left the Trump administration as a cost-cutting czar, and hopes rose that sales would recover.

Worldwide protests at Tesla showrooms in opposition to Musk’s prominent position in American politics also began in March and some have continued to pop up in the months following.

Musk recently said that Tesla was in the midst of a “major rebound” in sales. 

Still, some parts of the report were encouraging, according to analysts. Sales of the Models 3 and Y totalled 373,728, above the estimate of 356,000 from Wall Street analysts. Tesla shares rose 4.6 per cent in afternoon trading.

“The numbers weren’t as bad as thought with all the analyst forecast cuts we saw over the past week,” said Morningstar’s Seth Goldstein, though he added the report overall showed the company faces big challenges. “The current product lineup is at market saturation and Tesla will need the new affordable vehicle to grow deliveries.”

Possible growth in 2nd half of 2025

Sandeep Rao, a senior researcher at Leverage Shares, was also cautiously optimistic.

“While overall deliveries are still down year-over-year, the rate of decline has slowed significantly, indicating a possible bottoming out and even the potential for growth in the second half of the year,” said Rao.

While Tesla has leaned on offers such as low-cost financing to boost demand, it has yet to roll out long-promised cheaper models in a market where snazzy and feature-packed EVs from Chinese rivals have been winning over buyers.

Tesla had said it would start producing a cheaper vehicle — expected to be a pared-down Model Y — by the end of June, but Reuters reported in April it was delayed by at least a few months.

The row between Musk and Trump isn’t over, either — and it’s unclear how that could impact Tesla’s finances. After Musk once again took to social media to criticize the budget bill Trump is trying to pass, the president threatened Tuesday to use the power of his office to hurt his companies, including Tesla, pushing its stock down more than five per cent.

The new figures come as Tesla is focusing less on new models and more on robots, self-driving technology and robotaxis. Tesla is in the midst of a test run of robotaxis in Austin, Texas, which has drawn the scrutiny of federal car safety regulators because of a few mishaps, including one case in which a Tesla cab was shown on a video heading down an opposing lane.

The competition from rival EV makers is especially fierce in Europe, where China’s BYD has taken a bite out of its market share. Tesla sales fell 28 per cent in May in 30 European countries, even as the overall market for EVs expanded sharply, according to the European Automobile Manufacturers’ Association.

Musk has acknowledged that his work as head of the Department of Government Efficiency (DOGE) and his embrace of European far-right candidates have hurt the company. But he attributed much of the sales plunge to customers holding off while they waited for new versions of Tesla’s best-selling Model Y.

Tesla will report second-quarter financial results on July 23. In the first quarter, net income fell 71 per cent.