Turkey’s EV Tax Bombshell Crushes Tesla Amid Another Earnings Letdown
Elon's bad week just got worse.
Turkey slams Tesla with brutal EV tax hike—adding insult to injury after another dismal earnings report. The timing couldn't be worse for Musk's floundering empire.
Here's the wreckage:
• Turkish regulators just jacked up EV import taxes by 40% overnight
• Tesla's Q2 earnings missed targets—again
• Stock tanks 8% in after-hours trading
Meanwhile, legacy automakers are laughing all the way to the bank—proving once again that 'disruption' doesn't pay the bills. Maybe next quarter, Elon?
Turkey now adds to Tesla’s growing list of problems
Elon Musk had been counting on Turkey to help balance the sharp decline in demand across Europe. And for a while, it worked. In June 2025, Tesla’s sales in Turkey jumped 171% year-over-year to 7,235 units, with the Model Y leading EV sales. Meanwhile, registrations across Europe fell 23% compared to the same month in 2024, falling to 34,781 vehicles.
This made Turkey one of Tesla’s best-performing markets globally, and the Model Y’s tax advantage played a major role in that growth. The new tax changes, however, put all of that at risk. Musk warned recently that 2025 WOULD be a difficult year, blaming the loss of U.S. EV subsidies and Tesla’s slow progress in self-driving technology.
The tax increase in Turkey doesn’t just hit Tesla. It also puts pressure on competitors like BYD, the Chinese automaker that’s been trying to gain traction in Turkey by offering the Dolphin, Atto 3, and Seal under the same previous tax scheme. BYD has also announced plans to begin local production.
Companies such as Volkswagen, Hyundai, and Stellantis that sell lower-cost electric vehicles in the country could see their business models upended as well.
Musk said during Tesla’s earnings call that, “We are in the transition period where we will lose a lot of incentives in the US,” adding, “We probably could have a few rough quarters.”
His comments came as the company reported a 23% decline in second-quarter profits, further highlighting the company’s shaky position. The stock dropped over 4% in after-hours trading, and is now down 30% from its mid-December high.
Politics and public image continue to weigh on Tesla
Back in the U.S., Musk’s political involvement hasn’t helped. After openly backing Donald Trump’s re-election, he took a post in Trump’s new administration as head of the Department of Government Efficiency, before later leaving the administration in May after public breakup with Trump. Since then, he’s become an outspoken critic of the administration’s economic strategy and has pledged to launch his own political party.
But that political U-turn came with consequences. Many Tesla customers were turned off by Musk’s support of federal workforce layoffs, and his image as a public figure has taken a hit. That backlash is now starting to reflect in sales numbers, with Tesla struggling to maintain momentum against growing competition from both Chinese and Western automakers.
At the same time, Tesla is dealing with an aging model lineup, while rivals continue to release fresher, cheaper EVs. With tax changes in one of its few bright spots, a shrinking lead in innovation, and political distractions piling up, Tesla’s problems are stacking fast.
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