NEW YORK — The fallout from Elon Musk’s plunge into politics a year ago is still hammering his Tesla business as both sales and profits dropped sharply again in the latest quarter.
The car company that has faced boycotts for months said Wednesday that revenue dropped 12% and profits slumped 16% in the three months through June as buyers continued to stay away.
“The perception of Elon Musk, its chief executive, has rubbed the sheen right out of what once was a darling and soaring automotive brand,” wrote Forrester analyst Dipanjan Chatterjee in an email. Tesla is “a toxic brand that is inseparable from its leader.”
Quarterly profits at the electric vehicle, battery and robotics company fell to $1.17 billion, or 33 cents a share, from $1.4 billion, or 40 cents a share. That was the third quarter in a row that profit dropped. On an adjusted basis, the company said it earned 40 cents a share, matching Wall Street estimates.
Revenue fell from $25.5 billion to $22.5 billion in the April through June period, slightly above Wall Street’s forecast.
Tesla shares were little changed in after-hours trading as investors wait to hear from Musk on the company’s earnings call later in the afternoon.
Musk, who helped elect President Donald Trump with a massive campaign donation and then headed his DOGE cost-cutting program, has been pinning the future of the company less on car sales and more on robotaxis, automated driving software and robotics. But those businesses are yet to take off, and the gap between promise and profits was apparent in the second quarter.
A big challenge is that potential buyers not just in the U.S. but Europe are still balking at buying Teslas. Musk alienated many in the market for cars in Great Britain, France, Germany and elsewhere by embracing far-right candidates for office on the continent. And rival electric vehicle makers such as China’s BYD and German’s Volkswagen have pounced on the weakness, stealing market share.
Tesla began a rollout of its paid pickup robotaxi service in Austin, Texas, and hopes to introduce the driverless cabs in several other cities soon. Musk has said he expects to have hundreds of thousands of the cabs on U.S. roads by the end of next year.
In a conference call after the results were announced, Musk said the service will be available to probably “half of the population of the U.S. by the end of the year - that’s at least our goal, subject to regulatory approvals.”
He added, “We are being very cautious. We don’t want to take any chances.”
The test run in Austin has mostly gone off without a hitch, though there have been a few alarming incidents, such as when a robotaxi went down a lane meant for opposing traffic.
With driverless taxis, though, the billionaire who upended the space race and the EV manufacturing faces tough competition. The dominant provider now, Waymo, is already in several cities and recently logged its ten-millionth paid trip.
Meanwhile other threats loom. The new federal budget just passed by Congress eliminates a credit worth as much as $7,500 for buying an electric car. It also wipes out penalties for car makers to exceeding carbon emission standards. That threatens Tesla’s business of selling its “carbon credits” to traditional car companies that regularly fall short of emission standards.
Tesla generated $439 million from credit sales, down sharply from $890 million a year ago.
One way to boost sales that Musk has long promised: A cheaper model. The company now is planning to introduce that to the market in the last three months of the year. Tesla had previously said that was going to happen by June this year.
“It appears management’s focus will now shift to robotaxis and away from deliveries growth,” said Morningstar analyst Seth Goldstein, referring to the car sales.
“If Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy,” Musk said in his remarks, “it will be the most valuable company in the world.”
Musk also said he expected regulatory approval to introduce its so-called Full Self-Driving software in some parts of Europe by the end of the year. Musk had previously expected that to happen by March of this year. The feature, which is available in the U.S., is a misnomer because it is only a driver assistance feature.
Gross margins for the quarter, a measure of earnings for each dollar of revenue, fell to 17.2% from 18% a year earlier.
A highlight from the quarter was from something far removed from cars and robots: the company’s investment in bitcoin. That bet generated a $284 million paper gain, compared with a loss the previous quarter.