TMTPOST -- Tesla Inc.   during the past quarter   suffered   the   sharpest   revenue decline   in   at least   a decade   as   sales of   its top business electric vehicle ( EV )   kept falling,   according   to financial   results   released on   Wednesday.   Shares of   the U.S. EV giant   shed as much as   5.3% in afterhours trading.   

Credit：Tesla

Both   of Tesla ’ s top and bottom   line   for the   quarter   ended   in   June missed   Wall Street   expectation. Revenue   fell   12% year-over-year   ( YoY )   to   $22.5   billion,   compared with analysts ’   expected $22.64 billion.   That represented the   sharpest quarterly fall   in revenue   in more than a decade.   Tesla   three months   ago just   recorded   its first quarterly decrease in   revenue in five   years,   with revenue   for the first quarter   dropping 9% YoY.  

Tesla   reported   diluted earnings per share ( EPS ) for the second quarter   on non-GAAP basis of   $0.40   with a 23%   YoY   decrease. The earnings   slowed down from   a   YoY fall of 40%   for   the March quarter, though still   less than   analysts ’   projection of $0.42.   Adjusted net   income fell 23% YoY to $1.39 billion   after plunging 39%   for the previous   quarter.

Gross margin for   the second quarter   dipped 71   basic points YoY to   17.2%, beating estimated 16.5%. Free cash flow stood   at $146 million,   down 89% YoY,   and fell   short   of estimated $760   million. Capital expenditure ( Capex )   rose 5% YoY   to $2.39 billion, versus   analyst ’   estimates of $2.43   billion.

Tesla ’ s sales miss highlighted ongoing weakness of its automobile business, which was clouded by weak demand   and growing headwinds from intense competition, cost increase   due   to the global   tariff   war   to international backlash against CEO   Elon Musk.

Tesla said in its report that revenue was in part   weighed by decline in vehicle deliveries reduced vehicle average selling price ( ASP ) . Automotive revenue for the second quartered slid   16% YoY to   $16.66   billion, accounting for   74% of total revenue.   The   EV business   recorded double-digit revenue decline for two quarters   in a row.   Tesla earlier this month announced it delivered   more than   384,000   units   for the June quarter   with   an around 13.5%   YoY fall,   hitting   the   quarterly decline record   for the company. Deliveries of Model 3 and Y cars dropped 12% from a year ago, compared to a 52% plunge for other models.

However,   Tesla   reaffirmed its plan to produce more affordable vehicles by the mid-2025. Plans for new vehicles   that will launch   in 2025   remain on track, including initial production of a   more affordable models   in the first half of 2025,    the company   said in its   shareholder deck.  

Tesla said it continues to expand its vehicle offering, "including first builds of a more affordable model in June, with volume production planned for the second half of 2025." Additionally, the company continued development of Semi and   its purpose-build Robotaxi   product--   Cybercab, both slated for volume production in 2026.   

Tesla   in its   earnings   report   for the first quarter   said it would "revisit our 2025 guidance"   in   its second   quarter update. However, it didn ’ t   provide any guidance   around volume in   the shareholder deck. It   reiterated   the   macro   headwind   such as the trade and fiscal policies.

"It is difficult to measure the impacts of shifting global trade and fiscal policies on the automotive and energy supply chains, our cost structure and demand for durable goods and related services,"   Tesla   wrote.   It also said the actual results including volume will "depend on a variety of factors, including the broader macroeconomic environment, the rate of acceleration of our autonomy efforts and production ramp at our factories."

Tesla vowed to continue to make"high-value   investments"   in Capex and research   and development ( R&D )   despite   "a   sustained uncertain macroeconomic environment   resulting   from   shifting tariffs, unclear   impacts   from changes   to fiscal policy and political sentiment."   

Musk on an earnings call warned   more challenges   Tesla   are facing. "We ’ re in this weird transition period where we ’ ll lose a lot of incentives in the U.S.," he said, alluding to an expiring tax credit designed to boost EV sales. "But we ’ re still at the relatively early stages of autonomy."   

"Does that mean, like, we could have a few rough quarters?   Yeah, we probably could have a few rough quarters. I ’ m not saying we will, but we could," Musk told   analysts.   But   the chief exeutive   said   he   still expects autonomous vehicles to improve Tesla ’ s finances by the end of next year.

Musk highlighted the   launch of Tesla ’ s first Robotaxi pilot service in Austin   last month. Tesla in   its shareholder deck   also hailed   the service as   the   beginning of its   transition   from leading   the EV and renewable energy   industries to also becoming a leader   in artificial   intelligence ( AI ) ,   robotics   and related services.

Tesla acknowledged   the Robotaixi service is   currently   limited in initial scope, but   believed   "our approach to autonomy – a camera-only architecture with   neural networks trained on data from our global fleet of millions of vehicles – allows us to   continually improve safety, rapidly scale the network and improve profitability."