Why Is Tesla Stock Falling on July 2? Q2 Delivery Crash & the Musk-Trump War Explained

Tesla (TSLA) shares are in turmoil on July 2, 2025. The company officially reported its Q2 delivery numbers earlier that morning, and while the stock briefly popped about 4% at the open, that optimism evaporated fast. Peel back the headline and the numbers are ugly. Layer on top of that an escalating political feud between Elon Musk and Donald Trump, and investors are suddenly dealing with two major headwinds at once. Here’s a complete breakdown of why Tesla stock is under pressure — and what it all means.

The Big Number: Q2 Deliveries Plunged 13.5% Year-Over-Year

Tesla announced it delivered 384,122 vehicles globally in Q2 2025. That’s roughly a 14% drop compared to 443,956 deliveries in Q2 2024, and an even steeper 18% decline from the 466,140 units delivered in Q2 2023. The result also missed Wall Street’s consensus estimate of around 387,000 units.

Of those deliveries, 373,728 were Model 3 and Model Y combined, while other models — including the Cybertruck — accounted for just 13,409 units. This follows a similarly grim Q1, when Tesla delivered 336,681 vehicles, down 13% year-over-year. That’s back-to-back double-digit declines.

So why did the stock bounce at all in early trading? A lot of investors had been bracing for something far worse, and since the number narrowly beat some of the more pessimistic analyst forecasts, a “relief trade” kicked in. But that bounce is purely technical. The real problems run much deeper.

Pouring Gasoline on the Fire: The Musk-Trump Political War

Alongside the weak delivery data, Tesla has been weighed down by a very public falling-out between Elon Musk and Donald Trump. When Trump’s so-called “Big Beautiful Bill” included a provision to eliminate the $7,500 federal EV tax credit, Musk came out swinging against it — and threatened to launch a new political party to oppose the lawmakers who supported the legislation.

Trump fired back immediately, warning that Musk is “probably the biggest recipient of government subsidies in history” and implying that without that support, Musk’s businesses wouldn’t survive. That’s a direct shot at Tesla and SpaceX, both of which depend heavily on federal contracts and incentives. The message to markets was clear: that revenue stream is no longer guaranteed.

On July 1 alone, the Musk-Trump drama sent Tesla shares down more than 4%. Then, when Musk formally announced the creation of the “America Party” on July 5, Trump publicly declared Musk had gone “off the rails” — and Tesla stock fell another 6.79% in a single session on July 7.

Killing the EV Tax Credit: A Direct Hit to Tesla’s Sales

U.S. Tesla deliveries are expected to be down roughly 20% year-over-year for the second quarter, and the anticipated removal of the federal EV tax credit is a central reason why. Tesla’s U.S. market share is projected to shrink to around 2.9% as a result.

The $7,500 credit is not a trivial number for buyers. When it disappears, the effective sticker price of a Tesla goes up — and demand goes down accordingly. That puts Tesla in an uncomfortable position: either cut prices and watch margins bleed further, or hold the line and lose more customers to competitors. Neither option is great.

China and Europe Are Closing the Gap

Tesla also posted an earnings miss in Q1, and the market paid close attention not just to the revenue shortfall, but to the sharper-than-expected drops in operating income and net profit. Margin compression is becoming a structural concern. Meanwhile, BYD and other Chinese EV makers continue to chip away at Tesla’s global market share with competitive pricing and rapidly improving performance — a long-term threat that isn’t going away.

Should You Buy, Hold, or Sell Tesla Right Now?

Here’s the bottom line as of July 2: the delivery report itself sparked a brief, knee-jerk relief rally because it wasn’t catastrophically worse than feared. But structurally, Tesla is navigating three overlapping headwinds — weakening sales momentum, a politically charged threat to its government subsidies, and the looming end of the EV tax credit. Tesla shares have already been pushed down toward the $250 level in early July, reflecting all of this at once.

This isn’t just a temporary dip or a buying opportunity on a pullback. Tesla’s core business model is under genuine stress. The real catalysts for a meaningful recovery will be the commercial rollout of its robotaxi service, broader adoption of Full Self-Driving (FSD), and the launch of a more affordable new model. Until there’s visible progress on at least one of those fronts — and until the political noise settles — chasing any short-term bounce is a risky move. Watch how these three issues develop before making any major decisions.

Sources

• Tesla Q2 Deliveries Fall Drastically Year-Over-Year – Jalopnik (July 2, 2025)
• Tesla (TSLA) Q2 vehicle deliveries report – CNBC (July 2, 2025)
• Tesla shares sink as Trump-Musk feud heats up – Axios (July 1, 2025)
• Tesla stock tanks after Trump dismisses Musk’s new political party plan – CNN (July 7, 2025)
• Tesla Q2 Vehicle Deliveries Shrank 13% – Forbes (July 2, 2025)