The fallout from Elon Musk’s plunge into politics a year ago is still hammering electric vehicle-maker Tesla, as both sales and profits dropped sharply again in the latest quarter.

Tesla revenue dropped 12%, and profits slumped 16% in the three months through June as buyers continued to steer clear, and in some cases, turn to more affordable competitors’ offerings.

“The perception of Elon Musk, its chief executive, has rubbed the sheen right out of what once was a darling and soaring automotive brand,” Forrester analyst Dipanjan Chatterjee said in a research note, in which he called Tesla “a toxic brand that is inseparable from its leader.”

Quarterly profits at the electric vehicle, battery and robotics company fell to $1.17 billion, or $0.33 a share, from $1.4 billion, or $0.40 a share, dropping for a third straight quarter. On an adjusted basis, the company said it earned $0.40, in line with Wall Street analysts’ estimates. 

Revenue fell from $25.5 billion to $22.5 billion in the April through June period, slightly beating Wall Street’s forecast.

Tesla shares were little changed in after-hours trading as investors awaited Musk’s comments on the company’s earnings call. 

Betting on robotaxis

Musk, who helped elect President Donald Trump with a massive campaign donation and then headed his DOGE cost-cutting program, has pinned the future of the company squarely on its autonomous Robotaxi venture, which launched in Austin, Texas last month. It’s expected to take years, though, before Musk’s focus on robotaxis and humanoid robots turns a profit or the company. 

“We are at a ‘positive crossroads’ in the Tesla story: Musk is laser focused as CEO, Robotaxi/autonomous expansion has begun, demand stabilization has begun especially in China, and Tesla is about to embark on an aggressive AI focused strategy that we believe will include owning a significant piece of xAI,” Wedbush Securities analyst Dan Ives said in a research note. “While near-term and this quarter the numbers are nothing to write home about, we believe investors are instead focused on the AI future at Tesla with a motivated Musk back driving Tesla’s future.”

Foreign EV buyers have also turned away from Tesla toward competitors’ vehicles, research shows. Musk alienated potential Tesla customers in Great Britain, France, Germany and elsewhere through his political activities. Rival electric vehicle makers such as China’s BYD and German’s Volkswagen, meanwhile, have gained market share.  

Tesla faces other headwinds, too. The new federal budget just passed by Congress eliminates a $7,500 credit for EV buyers. It also wipes out penalties for car makers that exceed carbon emission standards. That threatens Tesla’s business of selling its “carbon credits” to traditional car companies that regularly fall short of emission standards.

Tesla generated $439 million from credit sales, down sharply from $890 million a year ago.