Tesla has reported a significant downturn in its second-quarter performance for 2025, with vehicle deliveries plummeting by 14 percent compared to the same period a year ago. The electric vehicle giant delivered a total of 384,122 vehicles between April and June, a sharp decline from the 443,956 vehicles delivered in the second quarter of the prior year. This figure includes 373,728 Model 3 and Model Y vehicles, alongside 10,394 of its 'other vehicles' like the Model S, Model X, and Cybertruck. Despite grim expectations from analysts, with UBS predicting an 18 percent decrease and Barclay estimating 375,000 units sold, Tesla narrowly outperformed these projections. However, this still marks a continued negative trend, following its first year-over-year sales drop since 2020.

In terms of production, Tesla manufactured 410,244 vehicles in the second quarter of 2025. This includes 396,835 Model 3 and Model Y vehicles, and 13,409 'other vehicles'. This production figure represents a minor 0.1 percent decrease compared to the 410,831 vehicles produced in the second quarter of the previous year, indicating that the production side saw less volatility than deliveries.

Several factors have contributed to Tesla's struggles. The company faces intensified competition in the global electric vehicle market and stagnant overall demand for EVs. Regionally, Tesla's sales in Europe have experienced a serious slump with five consecutive months of decline, according to registration data. Similarly, in China, domestic brands like BYD are increasingly capturing market share, leading to a decrease in Tesla's sales. Furthermore, the newly refreshed Model Y, despite now being widely available, has not provided the anticipated boost to sales.

A significant underlying cause for the sales decline is the growing public backlash against CEO Elon Musk's political activities, particularly his alignment with former U.S. President Donald Trump and far-right European leaders. This sentiment has fueled movements like the 'Tesla Takedown' protest, which has targeted dealerships worldwide to further erode sales. Although Musk recently announced his departure from his advisory role within the Trump administration, a move that initially sparked mild optimism and a slight rise in Tesla shares, his reputation in the U.S. has significantly plummeted, impacting consumer perception and brand loyalty.

Internal turmoil has also plagued the company. Recent high-profile departures include Omead Afshar, Tesla's VP of manufacturing, and Milan Kovac, the head of the Optimus humanoid robot project. Additionally, the highly anticipated launch of Tesla's robotaxi service has been largely criticized as a 'bust.' Contrary to Musk's earlier promises of 'unsupervised' vehicles, the service launched with Tesla-employed safety monitors present in the front passenger seats. Videos circulating have also shown significant safety lapses during the service's operation, including vehicles driving over double yellow lines and inexplicable hard braking.

These challenging sales figures raise fresh concerns ahead of Tesla's upcoming Q2 earnings report. The company had already reported a staggering 71 percent drop in net profit in Q1, suggesting another challenging quarter may be on the horizon. Analysts emphasize that Tesla's long-term market performance will increasingly hinge on public perception and brand loyalty, as much as on its product innovation, highlighting the complex interplay of technology, politics, and consumer sentiment in the current market.