Tesla reported a drop in its profit during the second quarter, despite CEO Elon Musk’s pivot back to focusing on his companies after his controversial role leading the Trump administration’s government cost cutting efforts. The company’s electric vehicle sales have been flagging, with a 13.5% drop in the quarter compared to the same period a year ago. Tesla’s net income also suffered, slumping 16% year-on-year. On a call with analysts, Tesla flagged a rocky outlook for EV income due to changes in vehicle regulations that were part of the tax and spending bill that President Trump signed into law this month.
The One Big Bill has a lot of changes that would affect our business in the near term. Tesla’s Chief Financial Officer Vaibhav Taneja forecast lower revenue due to changes in vehicle regulations that were part of the tax and spending bill that President Trump signed into law this month. Those regulations provided a revenue source for Tesla because competitors who couldn’t meet fuel economy targets could pay Tesla for “regulatory credits” instead of paying fines; the new law eliminates the fines.
New and used EV tax credits will end on September 30. Tesla’s Chief Financial Officer Vaibhav Taneja said plans to ramp up production of a lower-cost vehicle were slowed as the company rushed to meet an expected bump in demand ahead of the end of subsidies. Musk said the company was in “a weird transition period where we’ll lose a lot of incentives in the U.S.” and predicted “we probably could have a few rough quarters. I’m not saying we will, but I could.”
In its earnings report, Tesla called the second quarter “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.”
