Tesla (TSLA) reports 2Q25 earnings after the bell today. Zacks expects EPS of $0.39 (-25% year-over-year) and revenue of $22.43 billion (-12% year-over-year) – a steep haircut on the top and bottom line.

While the stock is still up 32% year-over-year, it is down almost 18% from the beginning of 2025. It is facing a number of issues for car sales, including strong domestic competition from China, one of its biggest markets. The ‘Big Beautiful Bill’ President Trump passed also stripped out the $7,500 EV tax credit, which could deter consumers.

It doesn’t help that American competitors are already undercutting prices by thousands of dollars – USA today writes that GM’s cheapest EV, the Equinox SUV, is almost $8,000 cheaper than Tesla’s cheapest, the Model 3 sedan. GM’s EV sales have risen over 100% year-over-year, showing that the EV market isn’t falling apart; Is Tesla is just losing dominance?

While Musk has long promised a cheaper version of the Model 3, the closest the company has gotten recently is a Model Y refresh. Model Ys make up around two-thirds of Tesla’s global sales, so a new version might boost sales – we have yet to see numbers. However, Wired reports that based on delivery times and market discounts, “the early signs do not look good.”

And before the new Model Y, there was the Cybertruck, which Bloomberg estimates will sell only 20K units this year vs Musk’s projections of 250K-500K.

Tesla also makes money by selling regulatory credits to other companies – “34% of Tesla’s total $32 billion in profits” comes from this segment, per Axios. Basically, companies that don’t meet fuel emission standards can buy credits from Tesla to “offset” their total pollution numbers. Just like with the EV tax credit, Trump’s tax bill eliminates penalties for carmaker emissions, endangering this lucrative stream.

However, Tesla isn’t valued as a car company – its multiple far exceeds automakers like General Motors (GM), who are getting in on the electric vehicle game. Instead, investors are hoping for the self-driving, AI, autonomous-robotic future Elon Musk has touted for years.

But is it making significant progress there? Tesla launched its robo-taxi service on June 22 in Austin, Texas. The launch was small with a hand-selected group of riders, and with a safety monitor in the front passenger seat. Musk said recently on X that robotaxi will be expanding its Austin service area, and that launching in the San Francisco Bay Area was likely “in a month or two.” However, Bloomberg reported multiple hiccups with the launch, including “a series of delays and errors.” Compare this to Waymo, which has been running autonomous rides for a few years now and only uses remote support.

While Musk’s promises of the future have kept the stock chugging higher for years, the raw numbers could pour cold water on the dream. Still, bears have been famously burned before on Tesla. With the options market implying a +/- $20 move, or around 6%, traders will be watching the report closely.

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