Falling sales and profits will lead Tesla to redouble efforts to provide a cheaper electric car for buyers, the car brand said this week.
The EV, software and battery manufacturer has reported a 13% slump in vehicle deliveries in Q2 2025 and its revenues have dropped 12% to $22.4 billion, while operating profit slumped 42% to $923m.
Tesla has been hurt by cuts to government support for electric cars in the USA, and intense competition from Chinese carmakers launching rival EVs in its markets.
The activities of its founder Elon Musk have also been reported as putting off some customers from the brand.
In its report Tesla said it started “first builds of a more affordable model in June”.
Currently the cheapest new Tesla, the Model 3, starts at just below £40,000 in the UK.
A smaller, cheaper EV will enable Tesla to increase its sales volume considerably.
“Our focus remains on prudently growing our vehicle volumes in a capex efficient manner by using our existing vehicle production capacity before building new lines. Plans for new vehicles that will launch in 2025 remain on track, including initial production of a more affordable model in 1H25,” said the company.
Musk told investors that he expected the company’s sales in Europe to increase once customers there are allowed to use the firm’s self-driving software.
He said he expected the first approval to come in the Netherlands but that the firm also hoped to win sign-off from the European Union, despite it having a “kafkaesque” bureaucracy.
“Autonomy is the story,” Musk said. “Autonomy is what amplifies the value to stratospheric levels.”
Tesla’s share price has fallen roughly 30% from a peak last year, after Musk’s support for Donald Trump helped him win the US presidency for a second term.
It has hit the headlines lately with the opening in Hollywood, California, of a Tesla Diner. It iss a Supercharging station, classic American diner and drive-in experience all wrapped up into one. With retro-futuristic design influences, this location offers Tesla and non-Tesla drivers alike with charging access along the historic Route 66 highway.
And last year Tesla UK said it was considering supporting independent dealers as the volume of used Teslas reaching the market increases.