Tesla revenue dropped 12% in Q2 2025 amid falling EV sales, lower regulatory credits, and shrinking solar and storage income. The company reported $22.5 billion in revenue, narrowly beating analyst estimates of $22.13 billion but showing a slowdown from Q1’s $19.3 billion.
Net income fell 16% year-over-year to $1.17 billion, while operating income plunged 42% to $923 million. Services revenue, which includes money from Tesla’s Supercharging network, grew 17% but wasn’t enough to offset the overall decline.
Tesla called Q2 2025 a “seminal point,” signaling a shift from just electric vehicles and renewable energy to AI, robotics, and related services — areas that currently burn cash without generating revenue. 
Regulatory credits, a key revenue stream, dropped 50% year-over-year to $439 million in Q2. Credits once propped up Tesla’s profits but are drying up fast after the 2025 Budget Reconciliation Act eliminated penalties for automakers not meeting emissions standards, slashing demand for EV credits.
The company delivered 384,122 vehicles in Q2, a 13.5% drop from last year but an improvement over Q1’s 337,000 deliveries.
Tesla also faces regulatory headwinds: The California DMV is pushing to revoke Tesla’s license to sell cars in the state over alleged false advertising around Autopilot and Full Self-Driving features. Meanwhile, a Florida wrongful death lawsuit related to a 2019 Autopilot crash could add legal risks, focusing on how Tesla markets its semi-autonomous driving systems.
Tesla’s Q2 earnings underscore a tough transition as it shifts toward AI and robotics while EV sales and credit revenues dwindle.
Tesla’s shareholder letter stated:
Q2 2025 was a seminal point in Tesla’s history: the beginning of our transition from leading the electric vehicle and renewable energy industries to also becoming a leader in AI, robotics and related services.
