Tesla has experienced a notable decline in quarterly deliveries, marking its second consecutive year of falling sales as demand wanes, influenced by CEO Elon Musk’s political views and the aging vehicle lineup.

In the second quarter, Tesla reported delivering 384,122 vehicles, a decrease of 13.5% from the 443,956 units delivered the same period last year. Analysts had anticipated deliveries of approximately 394,378 vehicles, based on an average estimate from 23 units by financial research firm Visible Alpha. However, forecasts from 10 analysts over the last month have been revised down to around 360,080 units. Analysts view delivery numbers as crucial indicators for evaluating vehicle sales and production success.

Seth Goldstein, senior equity analyst at Morningstar, commented, “The market is reacting less negatively than previously anticipated as several analysts have lowered their forecasts over the past week.”

This year, Tesla’s stock has fallen by 25%, driven by concerns over brand erosion in Europe, where sales are experiencing the most significant downturn, attributed to Musk’s alignment with right-wing politics and his role in the Trump administration’s cost-cutting measures. Following the public fallout between Trump and Musk in early June, Tesla saw a dramatic loss of about $150 billion in market value. Although there was a partial recovery in stock value the next month, tensions between Trump and Musk intensified amidst discussions of Trump’s expansive tax reforms.

Despite Musk asserting that sales increased in April, Tesla’s delivery dip comes in the context of a steadily expanding global EV market.

Earlier this year, the company revamped its top-selling Model Y crossover to stimulate demand, but the redesign resulted in production delays, leading some customers to postpone purchases while awaiting the updated model.

A significant portion of Tesla’s revenue and profit stem from its core electric vehicle business, while much of its trillion-dollar valuation hinges on Musk’s ambitious projections regarding the conversion of its vehicles to Robotaxis.

Last month, Tesla launched its Robotaxi service in a limited area of Austin, Texas, adhering to several restrictions, including selective invitations and the presence of safety monitors in the passenger seats. Nonetheless, only a handful of pilots were initiated, with around 12 Robotaxis operational. The National Highway Traffic Safety Administration has begun investigating the rollout of Tesla’s autonomous driving services.

The automaker anticipates beginning production of more affordable vehicles and enhancing the Model Y by the end of June.

While the introduction of less expensive models may provide a sales boost, Wall Street projects a second consecutive annual decline in sales. To achieve Musk’s objective of returning to growth for the year, Tesla will need to deliver 1 million units in the latter half of the year, a monumental challenge despite the historically strong sales numbers during this period.