While Tesla‘s been the king of electric vehicles for years, new data shows the company’s main source of money might be drying up. The company’s automotive sales make up a massive 84.3% of its revenue, but that number’s starting to crack.
Tesla delivered only 323,800 vehicles in the first quarter of 2025. That’s a big drop from what Wall Street expected. The company’s auto revenue fell from $82.42 billion in late 2023 to $73.66 billion by early 2025, even though they’re making more cars. Total revenue dropped 12% year-over-year to $22.5 billion in the second quarter of 2025.
Tesla’s revenue plummets 12% despite manufacturing more vehicles than ever before.
The problem isn’t just fewer sales. Tesla’s been cutting prices to compete with newer, cheaper electric cars from other companies. These price cuts are squeezing the company’s profits. More buyers want affordable electric vehicles, not just premium ones. As a result, Tesla faces increased pressure to innovate while maintaining profitability. This shift in consumer preference is contributing to why investors pay less for Tesla, as they question whether the company can sustain its growth amid rising competition. If Tesla cannot balance affordability with its premium image, it risks losing its position in the rapidly evolving electric vehicle market.
Tesla’s Model Y is still the top-selling electric vehicle, but competition‘s getting tougher every day. The company now ranks as the second-largest BEV maker globally, trailing behind China’s BYD.
There’s another worry hiding in Tesla’s financial reports. The company has $2.09 billion in deferred revenue and $9.95 billion in unsatisfied performance obligations. This money comes from customers who’ve paid in advance, but Tesla hasn’t delivered their products or services yet. Nobody knows exactly when this revenue will show up on the books.
Government rules could make things worse. Changes in energy policies might hurt Tesla’s growing energy storage business. Tariffs and incentives affect how much customers pay for Tesla’s cars. If these rules change, Tesla’s revenue could take another hit.
Tesla’s trying to find new ways to make money. Its energy and storage business grew 67% year-over-year in early 2025, bringing in $11.18 billion. The services segment, which includes Supercharger stations, earned $10.88 billion. But these businesses are still much smaller than car sales. Tesla owners actually spend roughly $4,287 on maintenance and repairs over 10 years, creating a potential revenue stream that the company could better capitalize on.
The company’s building more factories in the US and China. But if demand doesn’t pick up, Tesla might have too many factories making too many cars that nobody wants to buy.
With 140,473 employees and rising costs, Tesla needs to sell lots of vehicles to stay profitable.