Save (CNN) — Tesla’s troubles continued Wednesday as the company reported a double-digit drop in adjusted earnings for the second quarter, a fall that followed a record drop in sales in the same period. The company’s adjusted net income, the measure most closely followed on Wall Street, fell $419 million from one year ago to $1.4 billion. That 23% decline is a bigger percentage decline than the 13.5% fall in vehicle sales during the quarter, which was the largest drop in the company’s history. The stricter reading for net income fell 16% to $1.2 billion. Auto revenue – Tesla’s core business – fell 16% from April to June, while overall revenue fell 12%. Both were a bigger drop than Wall Street had forecasted, an indication that Tesla sold cars at a lower average price than it expected. The average auto revenue per vehicle sold fell about $500 to $42,231. While sales of its best-selling Model Y and Model 3 fell 12% compared to a year ago, sales of its more expensive models, including the Cybertruck, tumbled 52%. The sales weakness has been widely attributed to both backlash to CEO Elon Musk’s political activities, as well as increased competition for electric vehicles, especially from automakers in China. Tesla sales have been falling even in markets where EV sales are rising overall. The company is poised to lose its title of the world’s largest EV maker to Chinese automaker BYD, even though that company isn’t able to sell in America. Tesla’s sales plunge over the last 18 months has been a stunning turn for a company that recorded only one quarterly year-over-year sales drop before 2024. That quarter was at the height of the Covid 19 pandemic when showrooms and factories were ordered closed. The company still faces significant trouble ahead. A $7,500 tax credit for US EV buyers will expire in October, which could force the company to further cut prices, and thereby profit margins, to support sales. US buyers account for nearly half of Tesla’s sales. Perhaps the most serious financial problem facing Tesla is the elimination of the market for regulatory credit sales, which has fed $11 billion to the company’s bottom line since 2019. Gas-powered carmakers in the past bought emissions credits from Tesla, since its EVs came in below emissions limits, to avoid paying a fine. But the Republican tax and spending bill passed earlier this month removed financial penalties for automakers violating emissions rules. Tesla would have lost money in the first three months of the year without its revenue from selling those credits. But its net income exceeded those credit sales in the most recent quarter. Musk is due to answer questions from investors on a call later Wednesday evening. To offset concerns, he will undoubtedly try to focus investor attention on the company’s plans for robotaxis and humanoid robots. Tesla rolled out a long-promised robotaxi service in June. But the service was available in just a portion of Austin, Texas, to friends and fans of the company, and with an employee sitting beside the empty driver’s seat. “While the service is limited in initial scope, we believe our approach to autonomy … allows us to continually improve safety, rapidly scale the network and improve profitability,” Tesla said in a statement Wednesday. Still, it could be years before a robotaxi service actually makes money for the company. This is a developing story. It will be updated. The-CNN-Wire