Tesla Promises Cheaper Models as Profits Slide and Challenges Mount

San Francisco — Tesla has pledged to roll out more affordable electric vehicles and gain regulatory approval for its self-driving software in Europe, as it battles declining profits, shrinking deliveries, and growing political backlash.

The company told investors it began initial production of a cheaper model in June, but reported a 12% drop in revenue and a 16% decline in profit for the second quarter, its steepest revenue fall in over a decade.

Deliveries fell 14%, and Tesla blamed global trade shifts and U.S. tariffs, which cost the company $300 million in Q2 alone. CFO Vaibhav Taneja warned that ending U.S. EV tax credits would likely worsen the impact.

CEO Elon Musk said he expects increased sales in Europe once its Full Self-Driving (FSD) software gains approval, starting with the Netherlands. However, he criticized EU bureaucracy as “Kafka-esque.”

Tesla’s stock has dropped 30% since last year, with Musk’s political controversies, including a split with the Trump administration, adding to investor unease.

Despite introducing a new model, analysts say Tesla’s edge is narrowing as global competitors catch up and brand loyalty wanes.