Musk’s Tesla faces second year of sales decline as deliveries fall short

Tesla is headed for another year of shrinking sales after posting a second consecutive drop in quarterly deliveries.

The decline is being attributed to CEO Elon Musk’s right-wing political stances and an aging vehicle lineup that has alienated some buyers.

To avoid a full-year sales drop, Tesla must now deliver over one million vehicles in the second half of 2025.

Analysts say that will be difficult amid tariff-related uncertainty and possible cuts to key EV incentives, including the $7,500 federal tax credit under Trump’s sweeping tax proposal.

Tesla reported on Wednesday that deliveries fell 13.5% in the second quarter, coming in below analyst expectations.

This followed Musk’s April statement that sales had “turned a corner.”

Despite the shortfall, shares rose 4.5% — a reaction to the drop being less severe than some of the bleakest forecasts.

A partial recovery in China helped, where the refreshed Model Y is seeing increased demand in a highly competitive EV market.

Some investors welcomed the numbers, albeit with caution.

“You need two dots to draw a line. I don’t think you can get too excited yet until you have some confirmation (of a demand recovery),” said Camelthorn Investments adviser Shawn Campbell, who personally holds Tesla shares.

“We’ve had so much bad news — almost any good news is going to help at this point.”

Tesla has been relying on low-cost financing to entice buyers but has yet to release its long-promised affordable models.

Rivals from China are capturing market share with flashier, lower-cost EVs.

Tesla had planned to begin production of a cheaper version of the Model Y by late June.

However, Reuters reported in April that the timeline had slipped by several months.

A growing feud between Musk and US President Donald Trump over tax legislation has also unsettled investors.

There are fears the clash could drive away more customers and increase regulatory scrutiny, especially of Tesla’s robotaxi ambitions — a key part of its valuation.

In Q2 ending June 30, Tesla delivered 384,122 vehicles — down from 443,956 a year ago.

Still, that figure was up 14% from the first quarter.

Analysts had expected around 394,378 deliveries, based on an average from Visible Alpha. Some forecasts dipped as low as 360,080.

“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 Sandeep Rao, a senior researcher at Leverage Shares, which owns Tesla stock.

In June, Tesla ended an eight-month slump in China sales — a sign that the revamped Model Y is gaining traction despite aggressive competition from local brands like BYD.

Tesla has benefited from a strong brand reputation in China, where buyers are increasingly skeptical of domestic automakers allegedly reselling slightly used vehicles as new — so-called “zero-mileage used cars.”

Sales also improved in Norway and Spain, where some buyers are returning to Tesla despite earlier backlash against Musk’s political leanings.

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