Tesla (NASDAQ:TSLA) released its second-quarter delivery and production report on July 2, and while the results showed a significant year-over-year drop, they weren’t as catastrophic as many expected. The Tesla Q2 deliveries came in at 384,122 vehicles—down 13.5% from last year and marking the company’s worst quarterly decline ever.

Still, the number exceeded some of the more bearish forecasts. Notably, respected Tesla tracker Troy Teslike had predicted just 356,000 deliveries. The beat helped TSLA stock jump nearly 5% in a single day, offering a brief reprieve for nervous investors.

But was the bounce justified—or just a dead-cat rally?

Growth in Deliveries Remains Elusive

Despite the slight upside surprise, Tesla Q2 deliveries confirmed what many feared: sustained growth in vehicle sales is no longer a given. After years of expansion and an ambitious 50% annual delivery growth target, Tesla appears to have quietly abandoned that goal. If current trends continue, 2025 could mark the second consecutive year of declining annual deliveries.

The second half of the year won’t be any easier. With tougher year-over-year comparisons on the horizon, Tesla faces an uphill battle to show growth. The company’s EV sales have slowed significantly amid growing global competition, waning demand, and reduced subsidies in key markets.

BYD May Dethrone Tesla in EV Sales

One of the starkest warnings for Tesla comes from China-based BYD (OTCMKTS:BYDDY). In the first half of 2025, BYD sold over 300,000 more electric vehicles than Tesla, despite Q1 being a traditionally soft season in China.

BYD’s dominance isn’t limited to China—it’s rapidly expanding across Europe, Southeast Asia, and Latin America. With record-breaking sales every month this year, BYD is poised to overtake Tesla as the world’s top EV seller by volume. Unless Tesla stages an aggressive recovery in H2, it may permanently lose its EV crown.

Tesla Energy Faces Headwinds Too

Tesla CEO Elon Musk has long promised that the company’s Energy division would eventually outgrow its automotive segment. But recent numbers suggest otherwise.

In Q2, Tesla deployed 9.6 GWh of energy storage products—down from 10.4 GWh in Q1 and a peak of 11 GWh in Q4 2024. Though the year-over-year growth was just over 2%, the trend signals stagnation. The past two quarters have shown sequential declines, undercutting confidence in Tesla’s energy growth narrative.

Autonomy and Robotaxis: Hope or Hype?

As EV sales slow, Tesla and its most bullish supporters are pivoting attention toward future technologies—particularly autonomous driving and robotics. On June 22, Tesla launched its robotaxi service in Austin, Texas. While the launch marked a milestone, videos showing the robotaxis violating traffic laws quickly drew scrutiny and triggered a probe by the National Highway Traffic Safety Administration (NHTSA).

The robotaxi program, once seen as a moonshot, is now at the center of Tesla’s growth thesis. But execution risk remains high, especially with tightening regulation and public safety concerns mounting.

Rising Political Risk Complicates Tesla’s Future

The political environment is another growing risk for Tesla. Former President Donald Trump, the leading Republican candidate, has signaled plans to eliminate EV tax credits and could implement policies less favorable to electric mobility.

Even Tesla’s robotaxi rollout could face new hurdles. In Texas, Governor Greg Abbott recently signed legislation allowing the state to revoke autonomous vehicle permits deemed unsafe. With tensions flaring between Trump and Musk, Tesla could find itself navigating a far more hostile regulatory landscape if political winds shift.

Conclusion: Tesla Q2 Deliveries Don’t Tell the Whole Story

Yes, Tesla Q2 deliveries beat the lowest expectations, and the stock responded with a sharp one-day gain. But the bigger picture remains cloudy.

EV growth is stalling, energy sales are softening, robotaxis are under scrutiny, and political risk is rising. Tesla still has transformational potential, especially in autonomy and robotics, but its near-term outlook is loaded with uncertainty.

For now, long-term investors may want to wait and see how Q2 earnings and the low-cost model update unfold before adding to their TSLA positions.