In the second quarter of 2025, Tesla (NASDAQ: TSLA) delivered 384,000 vehicles, down 13.5% year-on-year. For the first half of 2025, Tesla’s total deliveries fell 13.2% year-on-year to 721,000 vehicles. Tesla released this information on July 2, U.S. local time.
These quarterly and half-year declines mark the largest drops in Tesla’s history since its founding. However, as Tesla’s second-quarter performance beat analysts’ expectations, the company’s stock closed at $315.65 per share on July 2, up 4.97%.
Tesla currently sells six models, with the Model 3 and Model Y being its mainstay products. In Q2 2025, these two models accounted for a striking 97.3% of total sales. Higher-priced models like the Model X, Model S, and the Cybertruck contributed only a small share, and the Semi electric truck has yet to enter mass production and delivery.
Tesla’s sales decline stems from multiple factors. During the 2024 U.S. presidential election, Tesla CEO Elon Musk actively engaged in politics. After Trump took office as President in January 2025, Musk served in his administration, overseeing massive layoffs and government spending cuts.
Musk has also frequently made controversial comments on international political issues and foreign elections, sparking large-scale protests in the U.S. and Europe that have directly damaged Tesla’s brand image and sales.
Tesla also faces fierce competition, especially from Chinese automakers. In the first half of 2025, BYD sold 1.023 million pure electric passenger vehicles, outpacing Tesla by about 300,000 units. On June 26, Xiaomi Auto launched its new model, the YU7, claiming that within 24 hours of its debut, it had received nearly 300,000 non-cancelable orders. Xiaomi’s YU7 directly targets Tesla’s best-selling Model Y.
Tesla urgently needs to respond. On July 1, Tesla announced a price increase of RMB 10,000 for the long-range version of the Model Y sold in China due to its extended driving range. At the same time, Tesla rolled out multiple alternative incentives instead of price cuts, including five-year zero-interest financing, an RMB 8,000 insurance subsidy, an RMB 8,000 paint option voucher, and charging benefits.
More crucially, launching new models remains the company’s core strategy. On July 2, Tesla released its 2024 Impact Report, outlining new product plans. Tesla stated it will push for mass production of the Semi electric truck and will introduce more competitively priced products in 2025. It remains unclear whether Tesla’s affordable model will be an entirely new product or a downsized version of the Model Y.
Facing fierce competition, Tesla aims to shed its identity as just an EV manufacturer. In its 2024 Impact Report, Tesla presented a business vision that includes vehicle manufacturing, EV products, commercial and residential energy storage, charging networks, AI data centers, autonomous Robotaxis, and humanoid robots such as the Tesla Bot or Optimus.
Tesla believes that simply relying on automakers to produce more EVs to replace gasoline vehicles is a long process, while autonomous driving technology can accelerate the transition. Tesla cited data showing that the average annual mileage of gasoline vehicles in the U.S. is 11,360 miles, while Tesla vehicles average 14,880 miles. Conservatively, a Robotaxi could reach an average annual mileage of 50,000 miles.
Tesla argues that widespread adoption of autonomous driving will sharply lower travel costs, thereby boosting total global EV mileage beyond that of gasoline cars.
Based on the Model Y, Tesla’s Robotaxi began pilot operations in Austin, Texas on June 22. On June 29, Tesla also achieved its first consumer delivery using fully autonomous driving. However, how much short-term revenue Robotaxi can contribute remains highly uncertain.
Tesla plans to begin mass production of its purpose-built autonomous vehicle, the Cybercab, in 2026. Whether the Cybercab can establish an entirely new business model remains to be seen.
Musk has high hopes for humanoid robots, claiming they will become Tesla’s largest product line ever. Recently, however, the head of Tesla’s humanoid robot division departed. Industry sources say Tesla’s robot suppliers in China have received notices to halt production orders, though Tesla has made no public comment. Many observers believe Tesla is unlikely to achieve its previously announced plan to produce 5,000 humanoid robots by 2025.
Tesla plans to release its Q2 2025 financial results on July 23, when management may share updates on its new business developments during the earnings call.