Tesla Hits Brakes on Growth Outlook After Profit Miss

Good morning. Tesla profit misses as the EV maker warns of more tariff pain ahead. Trump says the levies on China may come down “substantially.”

Rising government tariffs will take a heavier-than-expected toll on Tesla earnings this year, the electric-vehicle maker said, signaling a slower pace for sales growth in 2025 than previously anticipated.

The world’s most valuable carmaker now expects to grow annual sales by about 50% in 2025 from 2024 levels, compared with an earlier view for triple-digit gains. Earlier this year, Tesla signaled confidence in reaching that pace as it expands production capacity. But in recent months, the company has become more cautious on growth, citing macroeconomic headwinds and the potential for a U.S. recession.

From 2024 to 2025, Tesla anticipates a roughly $10 billion to $12 billion impact from rising government tariffs. The company had previously signaled an outlook for a smaller hit of $4 billion to $6 billion.

The Palo Alto, California-based company will fully revisit its outlook for 2025 during the next earnings call, Chief Financial Officer Dirk Helmuth said.

Here are other highlights from Tesla’s second-quarter earnings:

* Earnings per share: $0.67 versus $0.51 expected

* Revenue: $27.01 billion versus $26.40 billion expected

* Operating income: $2.8 billion versus $3.04 billion expected

* Net income: $2.7 billion versus $2.54 billion expected

Tesla shares rose 1.3% in May 10 from the previous closing price.

Elon Musk’s company has endured a turbulent few months, marked by a rapid pace of price cuts to boost sales amid slowing demand. That strategy has put pressure on operating margin, though executives said they expect improvement in the second half of the year.

The company also faces other challenges, including an aging vehicle lineup and backlash from drivers over rapidly changing Autopilot and Full Self-Driving technology.

Despite the gloomy outlook, there are some bright spots for Tesla. In the second quarter, revenue and operating income both beat estimates, while net income also came in better than expected.