To The Moon

$Tesla Motors(TSLA)$ much awaited Q2 2025 earnings were finally out on Wed, 24 Jul 2025 after market closed.

It offers the latest evidence of the damages Musk’s political adventure have done to his flagship company and it is not a pretty sight.

Based on LSEG forecasts:

Earnings per share (EPS):

• Came in at $0.40 per share vs $0.43 expected vs Q2 2024’s $0.52, that’s a -23.08% YoY decline. (see above)

• This is expected given TSLA’s dwindling sales since the start of 2025.

Revenue:

• Fell to $22.5 billion vs Wall Street consensus $22.74 billion vs Q2 2024’s $25.5 billion, that’s a -11.76% YoY decline.

• Tesla attributed the fall to decline in EV deliveries.

• For Q2 2025, it delivered a total of 384,122 vehicles, a -14% decline compared to Q2 2024.

• For a direct-to-consumer company like TSLA, deliveries are a proxy for sales.

Net income (GAAP):

• Was $1.17 billion vs Q2 2024’s $1.4 billion; that is a -16.43% YoY decline.

Free cash flow:

• Was $146 million vs Q2 2024’s $1.34 billion, this is a -89.10% YoY steep decline.

• Wells Fargo predicted that FCF could turn negative for the first time since 2018.

• That could trigger a steep drop in share price.

• As a result, WFC issued an “Underweight” rating and a $120 price target on the EV maker.

Other Risks.

(1) Failure to launch.

• Tesla’s refreshed Model Y was launched in March 2025 in the US, with notable cosmetic updates inside & out.

• Market take-up so far has been weak, with almost immediate delivery when ordered online, imply ample supply lying around and little evidence of a surge in demand.

(2) High Risk valuation.

• Since Q1 2025 earnings, valuation remains a concern.

• WFC noted that TSLA trades at a very high multiple of (a) 172x the consensus 2025 earnings per share (EPS) and (b) over 400x their own 2025 EPS estimate.

• All these points (with caution) to growth, that is still negative and with no signs of inflection.

(3) Falling operating Income.

• Has decreased by -42% YoY to less than $1 billion, where almost 50% of operating income coming from “sale of regulatory credits” to other automakers.

• This revenue source is expected to almost vanish in the months to come, thanks to Trump’s latest tax bill that has removed financial penalties for automakers that fail to meet federal emission standards..

(4) Zero guidance.

It is also no longer offering any specific guidance and only refers to growth as a potential future result of current “prudent” investments, without providing a timeline.

(5) Tesla Diner.

• On Mon, 21 Jul 2025, Musk opened its flagship F&B outlet - Tesla Diner in Hollywood, California.

• As usual, the CEO is already dreaming about expansion on “X”.

• He even included 4 out of 30 slides about the diner, in the Q2 earnings presentation deck. For a financial report, this clearly shows that something is not right.

• It is evident that Mr CEO has no idea that the Food & Beverage is a marathon business, where endurance is not in the man’s DNA.

(6) Return to Politics.

• On Tue, 22 Jul 2025, it was reported that a recent SpaceX document (to investors) contained a warning that Musk may re-enter US politics.

• The document is part of paperwork related to a tender offer (a proposal to buy shares from existing shareholders).

• It includes "risk factors" to inform investors about potential events that could affect the company.

• In this case, SpaceX disclosed Musk's possible political return as a risk to the business.

(7) The Beginning of The End.

• On Wed, 23 Jul 2025, Reuters reported that the Trump administration is expanding its search for partners to build US’s Golden Dome missile defense system.

• They are reaching out to $Amazon.com(AMZN)$ Project Kuiper and other large defense companies.

• This comes about as (Trump) tensions with Musk put SpaceX’s leading role in the program at risk.

• On the surface, it may look unrelated to TSLA, but all businesses funneled back to Mr CEO.

The Real Reason.

During post-earnings conference, TSLA management tried to explain their way through its dwindling top and bottom lines.

Investors need to know reasons behind TSLA’s deliveries down by -13% in H1 2025, is not due to:

• Global trade and fiscal policies.

• Energy supply chains.

• The “macroeconomic environment.”

The ‘real’ reason is because Tesla’s demand is collapsing over brand damage caused by Elon Musk.

The fact is — EV sales are surging globally. EV sales are doing great, just not TSLA.

Currently, it is not due to US macroeconomics although those might become problematic soon.

Bright Sparks ?

In its report, TSLA said it has completed first builds of a more affordable model in June 2025, with volume production planned for H2 2025.

The affordable models are expected to be stripped down versions of Model 3 and Model Y, rather than a new vehicle program altogether, that is what many investors had hoped for.

The company said it also is continuing to develop both the (a) Tesla Semi and (b) Cybercab, that are expected to enter volume production in 2026.

After reading, what was supposed to be TSLA’s bright sparks don’t seemed to be that ‘bright’ after all.

TSLA is too “big” to evaporate into thin air, just like that. If poor sales persist into Q3 2025, there is no telling whether fans will still stick around or sell.

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• Do you think Musk is the ‘real’ reason for TSLA dwindling sales and profits ?

• Do you think TSLA sales will fall further, with a pseudo-CEO in-charged.

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