Tesla Inc's (NASDAQ:TSLA) latest update delivered little cheer to the market, with shares down more than 4% in after-hours trading after a second straight quarter of falling sales.
Here are the five main points for those following the company from the UK:
1. Automotive sales slide - again
Tesla’s car business saw revenue drop 16% year on year to $16.7 billion, with total vehicle deliveries down 14%. This marks another quarter of shrinking sales, as demand wobbles in key markets and competition intensifies, particularly from lower-priced Chinese electric cars. Earnings per share came in at 40 cents, slightly below expectations, and revenue missed forecasts at $22.5 billion.
2. Pressure from tariffs and lost tax breaks
The company flagged higher tariff costs and warned that US federal tax credits for electric vehicles will end in September, making its cars more expensive for buyers. Tesla has already shifted its supply chain to adapt to new tariffs, but finance chief Vaibhav Taneja said US vehicle supply will be tight in the months ahead, potentially hurting late-summer sales.
3. Costs and profit under pressure
Net income slipped to $1.17 billion, down from $1.4 billion a year earlier. Tesla’s profit from regulatory credits (payments from other carmakers for emission compliance) also fell by half. While the group’s charging network continues to expand and showed stronger profits, the main car business is clearly feeling the pinch from higher costs and softer demand.
4. New products, but competition heats up
Tesla started building its long-awaited lower-priced model in June, with production volume planned for the second half of 2025. However, rivals, particularly from China, are already launching affordable electric cars with advanced features, narrowing Tesla’s once-clear lead. Musk remains bullish on robotaxis and humanoid robots, with limited pilot schemes underway in Texas, but these remain longer-term ambitions.
5. Shares underperform as uncertainty grows
Tesla’s share price is down 18% for the year, the weakest showing among the major US tech stocks popular with UK investors. The company faces uncertainty on several fronts: regulatory changes, the risk of a bumpy few quarters, and pressure to deliver on its ambitious new technology promises. Musk acknowledged, “We probably could have a few rough quarters.”
And on a more upbeat note
Ark Invest, a well-known backer of disruptive tech, remains firmly bullish on the company’s long-term prospects.
Sam Korus, ARK Invest’s director of research for autonomous technology and robotics, acknowledged that the results might look lacklustre at first glance, particularly for those focused on Tesla’s delayed low-cost car, but he urged investors to look further ahead.
Korus highlighted that Ark’s 2029 share price forecast for Tesla is an eye-catching $2,600, with a striking 90% of that value expected to come from robotaxis rather than conventional car sales.
He argued that Tesla has the potential to scale its robotaxi service rapidly, possibly to millions of vehicles by the end of next year, thanks to its unique manufacturing scale and vision-only approach, which reduces hardware costs and allows for fleet flexibility.
Compared with competitors like Waymo, Korus believes Tesla could undercut on price and adapt more quickly to market demand. With Tesla already producing thousands of cars per day, double the size of Waymo’s entire fleet, ARK expects the roll-out of autonomous ride-hailing could transform the company’s fortunes and make affordable, convenient robotaxi travel mainstream sooner than many expect.
The bottom line on Tesla
Despite a tough quarter and a share price wobble, Tesla remains a company in transition. Near-term headwinds, sliding automotive sales, slimmer profits, and regulatory uncertainty have dented confidence. But the group is still investing heavily in future growth, from ramping up production of a more affordable model to betting big on autonomous technology.
As Ark Invest points out, the real game-changer could be robotaxis, where Tesla’s scale and cost advantages might let it outpace rivals. For investors, the coming year is likely to bring volatility, but Tesla’s ability to execute on its ambitious plans will be key in shaping whether it stays at the forefront of global innovation or gets overtaken by nimbler competition.