Although Tesla's rebound in sales in the second quarter was a major highlight, the core car business also showed signs of pressure. As Tesla faces increasing competition in its biggest market, the decline in average selling price is hurting its profitability. The average revenue for every Tesla car sold this quarter fell from $45,345 to $42,730. Due to policy adjustments, Tesla's revenue from environmental quota sales to under-compliant traditional car companies is also drying up, down about two-thirds from the same period last year to US$146 million. The shrinking profit margins of Tesla's automotive business will make it harder to finance Musk's spending plans — spending more than $25 billion this year, almost three times the company spent last year to develop AI-driven autonomous driving technology, robotic taxis, and humanoid robots. “This is a big year of capital expenditure, but I'm sure all the projects we've invested in will bring amazing returns,” Musk said during an analyst conference call after the earnings report was released. To increase profitability, Tesla is counting on its advanced driver assistance software — the “fully automated driving supervision model” — to drive future car sales and revenue growth. Tesla said that at the end of the quarter, its FSD active subscriptions were around 1.5 million, an increase of 56% over the same period last year. The company received approval to deploy FSD in the Netherlands in April, and after Dutch approval, several other European countries have allowed the technology to be used.

Although Tesla's second-quarter sales rebound was a major highlight, the core car business also showed signs of pressure. As Tesla faces increasing competition in its biggest market, the decline in average selling price is hurting its profitability. The average revenue for every Tesla car sold this quarter fell from $45,345 to $42,730. Due to policy adjustments, Tesla's revenue from environmental quota sales to under-compliant traditional car companies is also drying up, down about two-thirds from the same period last year to US$146 million. The shrinking profit margins of Tesla's automotive business will make it harder to finance Musk's spending plans — spending more than $25 billion this year, almost three times the company spent last year to develop AI-driven autonomous driving technology, robotic taxis, and humanoid robots. “This is a big year of capital expenditure, but I'm sure all the projects we've invested in will bring amazing returns,” Musk said during an analyst conference call after the earnings report was released. To increase profitability, Tesla is counting on its advanced driver assistance software — the “fully automated driving supervision model” — to drive future car sales and revenue growth. Tesla said that at the end of the quarter, its FSD active subscriptions were around 1.5 million, an increase of 56% over the same period last year. The company received approval to deploy FSD in the Netherlands in April, and after Dutch approval, several other European countries have allowed the technology to be used.