Tesla experienced a significant decline in vehicle sales over the past three months, as consumer boycotts tied to CEO Elon Musk’s political stance continue to impact the brand. Despite earlier hopes that public backlash would fade, sales for the April-to-June quarter dropped by 13% compared to the same period last year.
The electric carmaker sold 384,122 vehicles during the second quarter, down from 443,956 a year earlier. This slump comes at a time when Musk, who recently stepped away from his controversial role as a government cost-cutting adviser, had expressed optimism about a rebound in demand. While he recently claimed Tesla was undergoing a “major rebound,” the latest figures suggest the recovery is far from complete.
Some analysts noted silver linings in the report. Sales of the Model 3 and Model Y reached 373,728, outperforming Wall Street’s expectations of 356,000. That news helped Tesla shares rise by 4.6% in afternoon trading.
Morningstar analyst Seth Goldstein commented that although the numbers weren’t as bad as feared, the company still faces serious hurdles. He pointed out that Tesla’s current lineup may have reached market saturation and that future growth hinges on the release of a lower-cost model, which Musk has promised will launch later this year.
Meanwhile, competition in the electric vehicle space is heating up. Tesla’s rivals have quickly capitalized on its weakening sales, especially in Europe, where Chinese automaker BYD is gaining ground. In May, Tesla’s sales in 30 European countries plunged by 28%, even as the broader EV market grew.
Domestically, Musk’s political involvement remains a sore spot. His recent public criticism of President Trump’s budget drew retaliation, with Trump threatening to take action against Musk’s businesses — a move that briefly sent Tesla’s stock tumbling more than 5%.
Tesla is also shifting its focus away from new car models and investing heavily in autonomous technologies, including self-driving vehicles and robotaxis. The company is currently testing robotaxi services in Austin, Texas. While the trials have mostly gone smoothly, a few safety incidents — including one involving a robotaxi driving on the wrong side of the road — have drawn regulatory attention.
Musk has acknowledged that his political alignments, including his support for far-right candidates in Europe, may have damaged Tesla’s reputation. However, he also cited consumer anticipation for updated versions of the Model Y as a reason for the recent sales dip.
Tesla is scheduled to release its second-quarter earnings on July 23. In the previous quarter, the company reported a steep 71% decline in net income, raising concerns about future profitability.
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