• Volkswagen Group CEO Oliver Blume is prepared to invest a minimum $10 billion in the United States in the hopes of securing a like-for-like reduction in its tariff bill. On Friday the world’s second-largest carmaker by vehicle sales slashed its 2025 guidance for revenue, margins and cash citing Q2 headwinds from U.S. import duties totalling roughly $1.4 billion. Once the company knows what tariffs are agreed between the Trump administration and the European Union, VW aims to enter into bilateral talks directly with White House to seek carve-outs.

Oliver Blume wants to make a deal. The CEO of Volkswagen Group, the world’s second-largest carmaker, is prepared to put a minimum of $10 billion on the table in exchange for lower tariffs levied by the Trump administration.

Under the proposal, for every dollar that Volkswagen invests, it would like to receive in return an equal amount offset against its tariff bill. The VW boss is only waiting on the European Commission to reach a deal on behalf of the entire EU so he then knows what precise rates he can expect on goods exported to the U.S. market.

“Every company has got a special situation in the U.S., and therefor I think it should be possible to add a specific deal on company level,” Blume said on Friday, after revealing his company just paid $1.4 billion to the U.S. customs authorities. “We can offer huge investments.”

Volkswagen already operates a U.S. assembly plant in Chattanooga, Tennessee, where it builds the Atlas SUV and ID.4 electric crossover. It is currently investing $2 billion in a new site in Blythewood, South Carolina, where it plans a new family of electrified vehicles under the resurrected Scout brand first launched by defunct manufacturer International Harvester. VW could not confirm whether this figure was included in the $10 billion.

Typically, trade policy falls under the responsibility of Congress. But the White House capitalized on a legal loophole to seize control over tariff rates by declaring the import of foreign-built passenger cars to pose a demonstrable risk to national security. His administration argues the U.S. must rebuild a domestic manufacturing base gutted by the offshoring of jobs abroad that can ward off potential military threats 

Bilateral deals could prove costly in the long run

A special quid-pro-quo exemption or carve-out negotiated bilaterally between a corporation and a federal government is not typical under the rules governing World Trade Organization members like the United States.

Thanks to the two previous U.S. administrations, the WTO’s ability to settle and enforce trade disputes has been neutralized when its highest court—known as the Appellate Body—was effectively dismantled. At the end of 2019, Trump blocked appointments needed to achieve a quorum in a tactic that was later adopted by President Biden as well.

Irrespective of the legal issue, the idea that corporations could sidestep their national governments by lining up, one after the other, to each strike their own special deal with the White House has experts concerned that the rules of trade could end up becoming permanently chaotic.

“This is a new development that is anything but positive, since it introduces unpredictability. In the long run it could prove very expensive when it comes to overall prosperity,” says Julian Hinz, a director of the Trade Research Center at Germany’s Kiel Institute for the World Economy (IfW).

The White House could not be reached immediately by Fortune for comment.

Guidance cut

“The great thing about the rules-based system is that they were valid for everyone—you didn’t have to negotiate with every conceivable economic actor,” the global trade economist told Fortune. “It might offer a temporary advantage over your competitors, but it’s extremely myopic.” 

Earlier on Friday the company behind VW, Audi, and Porsche slashed its 2025 guidance across the board, reducing expectations for everything from its annual sales revenue and it operating margin through to even how much cash it has at year-end. 

And the chief culprit, according to Volkswagen Group, is the 27.5% duty levied by the president on all vehicles and car parts entering the United States. The gross sum from tariffs is estimated to wipe a full two percentage points off its operating margin should they remain at current levels.

Once planned mitigation efforts are factored in this would result in a 4% operating profit margin. In a more optimistic scenario based on tariffs of just 10%, it expects that number to hit 5%. Previously it had guided for a range of 5.5% to 6.5% versus 5.9% in 2024.

Its tariff bill to the U.S. Customs and Border Patrol ballooned from €100 million ($117 million) in the first three months of this year to €1.2 billion in the second quarter alone. That means the $1.4 billion in equivalent U.S. currency it paid exceeds the $1.1 billion that Detroit rival General Motors paid during the past three months.

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• CEO Elon Musk disappointed investors after warning Tesla could see a second straight year of declining EV sales. He also suggested Q4 could be rough once the U.S. federal tax credits for EV sales expire. All of that might have been acceptable had he provided specific milestones for how quickly he could scale his new autonomous ride-hailing service beyond a dozen cars in Austin. “I wanted to hear more details,” said Gene Munster, cofounder of Deepwater Asset Management.

Tesla shares sold off overnight and Wednesday morning after CEO Elon Musk scrapped his full-year guidance, warned upcoming quarters could prove rough, and hosted an earnings call once again long on promises and short on specifics. The stock was down 9% this morning at the open.

Just over a month ago, the company launched its maiden robotaxi fleet in Austin. The new flagship service crystallized over a decade of investment in artificial intelligence and is meant to be definitive proof the EV maker is now an AI and robotics company. 

Yet four weeks later, Tesla has little to show for it. Just 7,000 driverless miles have been logged, Musk’s team revealed in the quarterly call. That works out to 20 miles per car per day, on average. 

Shares held steady in after-hours trading following the release of widely expected weak Q2 results that included an 89% drop in net cash generated. But they dipped lower as the earnings call drew to a close with little in the way of answers. They were nearly 6% down as trading began in New York.

“Investors were searching for something and not hearing it,” wrote Gene Munster, cofounder of Deepwater Asset Management and longtime Tesla bull, who counted himself among the disappointed. “I wanted to hear more details about how the master plan will advance in the near term.”

The call was Musk’s first opportunity to present shareholders with a clear road map for his robotaxi service with concrete milestones that specified …

• How many vehicles in the fleet he was targeting.
• By what time they would be deployed.
• How much revenue per ride they would be earning.

Right now, he is charging a flat rate of $6.90, but most expect either a per-mile rate or a dynamic price similar to Uber. 

Another key question that went unanswered was when the company felt it would no longer be necessary to employ a human safety monitor in the front passenger seat. Right now, scaling is inhibited by the presence of an onboard babysitter needed to prevent freak occurrences, like the recent case in which a monitor had to stop a Tesla from running a railroad crossing as a train was approaching. 

Simultaneously both ‘very cautious’ and ‘hyper-exponential’

Take this statement for example, in which Musk reaffirmed comments earlier this year that his autonomous ride-hailing service would expand to most of the country by year-end.

“We’ll technically be able to do it. Assuming we get regulatory approvals, it’s probably addressing half the population of the U.S. by the end of the year. But we are being very cautious, we don’t want to take any chances—we’re gonna go cautious. The service areas and the number of vehicles in operation will increase at a hyper-exponential rate.”

That was one continuous answer. Broken down, Musk is arguing his four-week-old service that continues to operate with just around a dozen vehicles in one city will—in the course of only five months—expand in a way that is simultaneously both “very cautious” as well as “hyper-exponential.”

“In the meanwhile, we’ll launch a service with a person in the driver’s seat just to expedite while we wait for regulatory approval,” said Tesla AI director Ashok Elluswamy on the call.

But investors don’t want another Uber. For the business model to work, the human safety monitor needs to be removed from the car. Here as well there was no timetable—just the word “eventually” in the shareholder deck. 

The negatives

None of this might be a problem were it not for Tesla’s struggling core car business. With vehicle sales down 13% through the first half, Musk on Wednesday scrapped his guidance but confirmed vehicle sales would definitely grow this year. Now the company says the “actual results will depend on a variety of factors.” Could a second straight year of declines be possible? In October, Musk was still promising a 20% volume increase minimum.

The Tesla CEO also confirmed the low-cost model—effectively a cheaper Model Y—has been delayed. Volume production is now slated for the fourth quarter of this year. Until then, it wants to prioritize meeting demand from customers looking to buy a Tesla before the federal tax credit expires at the start of October.

Starting that same month, however, the outlook begins to darken. “We probably could have a few rough quarters,” Musk conceded, citing Q4, Q1, and potentially Q2 as well. Then the script should flip once its upcoming Cybercab is deployed in sufficiently large numbers in its robotaxi fleet in the latter half of next year financed in part with the $37 billion in cash Tesla holds on its balance sheet.

Fortunately, the upfront costs shouldn’t be too expensive for Tesla to finance. The two-seater was conceived to cut corners on performance, only aiming for a “gentle ride.” Since it’s not really meant for private ownership, it doesn’t need the kind of expensive propulsion system or finely tuned chassis that can deliver the speed, agility, or handling of a typical Tesla.

The positives

There were some positives in the Q2 results. Automotive gross margins, excluding CO2 regulatory credits, came in at 15%, a 40 basis point improvement over last year, giving investors hope the downward trend may finally be forming a bottom.

Nor were the $439 million in regulatory credits needed for the group to earn a profit either, thanks in large part to record profits from its industrial-size Megapack batteries. Sold to utilities for managing sudden peaks in electricity demand, its stationary energy storage solution constitutes a business with gross margins double those of its larger car operations. 

Tesla also expanded its Cortex data center in Austin by nearly a third, and now has the equivalent of 67,000 Nvidia H100 AI training chips. Musk also said his company’s own proprietary AI inference chip is built into every Tesla car and will soon become so intelligent it presents a threat to U.S. national security should it end up in the wrong hands. 

Referring to his upcoming AI5 chip that follows the current HW4 generation, Musk said: “It’s so powerful we’ll have to nerf it to some degree for markets outside the U.S. because it blows way past the export restrictions.”

But this wasn’t sufficient for the market. True, it is not unusual for the stock to sell off after a business update, since Tesla quarterly calls are often viewed as “buy the rumor, sell the fact” trades. 

The news that emerged Wednesday proved, however, lean pickings for shareholders still willing to pay 140 times next year’s consensus earnings to own the stock, especially since the equity story hinges so heavily on the success of its maiden robotaxi fleet.

“Investors were hungry for clear expectations about how many vehicles are on the road in Austin today and what it will end the quarter at,” Deepwater’s Munster added. “They wanted to hear that the company expects the human supervisor to be removed during the quarter or that the service will shift from being invite-only to public availability.”

That hunger was not sated.

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• Porsche CEO Oliver Blume warned the nearly 37,000-strong German workforce he will negotiate with its labor union in the coming months over further cost cuts. Already, it plans to eliminate more than a tenth of its staff by 2029 to position the brand for a world where it sells only 250,000 cars annually, rather than the 311,000 it achieved last year. A combination of plunging demand in China and effects from Trump’s economic agenda are hitting the export-reliant luxury sports car maker hard.

Once the envy of the entire German auto industry, Porsche is drifting deeper and deeper into its biggest crisis in decades.

In a letter to employees, the manufacturer of the iconic 911 sports car informed its 36,700 domestic workforce it would enter negotiations with the IG Metall trade union over a second package of cost cuts designed to protect profit margins.

The latest reductions are expected to come on top of the already 3,900 job cuts planned in Germany through 2029, designed to shrink the company’s cost base to reflect a world where the brand sells only 250,000 cars annually instead of the 311,000 achieved last year.

Chief executive Oliver Blume, who splits his time running both Porsche and its majority owner Volkswagen Group, warned staff that they would have to gird themselves for difficult times to come. 

“Our business model that sustained us over many decades no longer is functioning today in its current form. Business conditions have deteriorated massively within a short period of time,” Blume warned his employees in comments obtained by Fortune. They were first reported on Friday by the German media.

He cited a pair of related contributing factors, starting with China, where first-half vehicle sales plunged 28% to their lowest level in eleven years amid a brutal price war, particularly for EVs. The brand had once sold 95,700 cars there in 2021, an all-time record—at its current pace, it would be lucky to get half that result this year.

This bled into another issue: a slowdown in the adoption rate of its EVs. Now it no longer expects an 80% share of its volumes to come from fully-electric cars by 2030 as realistic, preferring not to give a forecast any longer.

This, however, heavily impacts Porsche and its supplier base, given the investments already made in new products like the electric Macan.

“On the one hand we need EVs to fulfil regional CO2 regulations,” Blume wrote, “but on the other the profit margins are far below those of our combustion engine cars.” 

Trump a double disaster for Porsche — weak dollar, high tariffs

He didn’t stop there, though: without actually mentioning Trump by name, the Porsche CEO said the U.S. poses its third major problem. 

Demand there ironically has never been better, and yet it is suffering under the combined weight of the current administration’s economic policies.

These have sparked a sharp decline in the U.S. dollar versus the euro that, together with its punitive regime of tariffs, darkens the outlook for the export-reliant carmaker.

“Despite a delivery record in the first year, we are under enormous financial pressure,” he admitted, referring to the U.S. market. 

The result is a company whose operating margin is currently forecast by management to shrink to between 6.5% and 8.5% from 14.1% in 2024. Even during the dark days of the 2008-09 global financial crisis, Porsche’s sports car business could still maintain an operating return on sales in the double digits. 

“A further profit warning with Q2 results seems likely,” wrote UBS, estimating Porsche’s operating margin could be guided down to 5%-7% given current guidance only includes the effects from U.S. tariffs for the months of April and May.

Once the world’s third most valuable carmaker after Tesla and Toyota, Porsche shares lost 29% so far this year. Anyone who poured money into Porsche’s September 2022 public offering of stock—Europe’s largest in over a decade—is currently sitting on losses short of 50%. 

At the same time that Porsche is facing its biggest crisis in decades, the company is also in the process of overhauling half its senior management team with four new C-suite executives in charge of finances, sales & marketing, personnel, and procurement.

The company confirmed the tenor of the letter, but declined to comment further.

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• Tesla CEO Elon Musk launched his Austin robotaxi service nearly a month ago to great fanfare. But FSD Community Tracker host Elias Martinez argues everything that has happened since explains why the service has not scaled—it remains nowhere near safe enough to remove human safety monitors, as proven by a near accident.

The very day Elon Musk expanded the boundaries of his three-week-old autonomous ride hailing service in Austin, Joe Tegtmeyer’s Tesla tried to illegally run a railroad crossing just as a locomotive approached.

“The robotaxi did not see that, and the safety observer had to stop the vehicle until the train had passed. So there’s a little bit of work that still needs to be polished up with the software, but otherwise it’s been just an amazing opportunity to see how well the expanded service is working,” he said on Monday in a post on X.

Taking what might have been a life-threatening situation seemingly in stride, Tegtmeyer then argued in favor of Tesla adding more cars to the 10 or so currently on the roads to cut waiting times that had ballooned to 20 minutes.

None of this comes as a surprise to Elias Martinez. One of the earliest Full Self-Driving beta testers, he says Tesla’s software has “come a long way” over the past four years. But he argues all available evidence points to the technology being nowhere near robust enough to support the 10,000 cars Musk claimed in May were possible in theory on day one. 

“These issues prove Tesla should never have launched even with just 10 vehicles,” he tells Fortune. “Yes, it works most of the time, but it blows my mind we’re still seeing issues like FSD running red lights or driving on the wrong side of the road. This shouldn’t be happening on such a regular basis.”

The problem is with each car added, the greater the statistical chance of a collision. Any robotaxi service, Waymo included, needs to be virtually flawless in order to scale the service safely—yet with Tesla there’s no sign of that, according to Martinez.

First 42 minute @robotaxi ride complete! Follow along on this ride with me and I’ve got some observations and things to talk about along the way!

This ride was almost perfect but I did have one instance of the safety driver having to intervene at a rail road crossing, which I… pic.twitter.com/CQwKuHU8Nx

— Joe Tegtmeyer 🚀 🤠🛸😎 (@JoeTegtmeyer) July 14, 2025

A distraction from declining sales numbers

The former U.S. Marine hosts the crowd-sourced FSD Community Tracker, the single most sophisticated and reliable form of empirical data collection and analysis on Tesla’s self-driving technology that is publicly available. Car executives like Volkswagen Autonomous Mobility CEO Christian Senger speak highly of it as a benchmark, and even Musk—who has his own internal data on disengagements that he refuses to share—singled it out as proof the company is making progress.

Developed with the help of a Canadian Tesla driver, his tracker is simple and easy to use: during a trip, FSD beta testers like Martinez catalog in real time problems that arise directly into the vehicle’s onboard infotainment system, where it’s stored until it can be uploaded to the internet. Drivers are incentivized through weekly recognition of the top contributors, turning it into something of a friendly competition.

Currently, its data shows even the latest FSD version from Tesla results in a critical disengagement roughly every 340 miles between both city and highway at present. Called 13.2.9, it rolled out in May just weeks before the Austin service launched. “You sometimes hear Elon saying, ‘we’re having a hard time finding disengagements.’ That is such BS,” Martinez adds.

Although the Austin robotaxi fleet is believed to be using a newer iteration, in Martinez’s estimation it closely approximates the performance of the version released to the public since they reveal similar shortcomings, such as driving in the wrong lane.

He believes Tesla has been more focused on meeting Musk’s June launch timetable come hell or high water than on perfecting the actual underlying technology. Since demand for his EVs dropped sharply in the first half of the year and his Cybertruck has proven to be a commercial flop, the CEO needs something to keep investors happy. 

“This feels like a distraction from the declining sales numbers,” he said, adding “Elon is gambling.”

In the meantime, the last major update Tesla owners received, v13.2.1, launched to the public seven months ago.

The company did not respond to a request to comment on this or any other point related to its FSD self-driving technology.

Musk stakes future on game-changing technology

When Tesla hosts its second-quarter earnings call after the close of markets on Wednesday, Musk will face a barrage of questions around the roadmap of his robotaxi pilot. At press time, the top-ranked issue is the performance he’s seen so far in Austin and how soon the service can scale in terms of new cities and more vehicles.  

Investors have a lot of money riding on FSD, and will want answers as to how soon 10 cars in Austin can grow to thousands across the country. Only then will they get a feeling for how long it will take Tesla to leapfrog Waymo, going from zero unsupervised miles currently to the 100 million just recorded by its archrival.

The technology could prove a game changer, especially for marginalized communities like the handicapped. Jessie Wolinsky, a legally blind millennial who video blogs about her experience slowly losing her eyesight, told California regulators she was grateful for being part of Waymo’s trusted rider program.

“It has provided me with a feeling of safety that I’ve never had before.,” she said at an August 2023 hearing shortly before the state voted to greenlight the technology. “I get into a Waymo vehicle, not only am I able to get to where I need to be on my own terms, which is huge, but I am able to do so without the fear of being harassed, groped, assaulted, attacked or potentially worse.”

Musk staked the company’s fortune on the robotaxi service, which now must generate the profits needed to fund his Optimus robot program currently under development. 

If you want trust, you need full transparency

But autonomous driving at its heart is a technology steeped in statistical eventualities. How many cars are operating at the same time and how many miles do they collectively log before the first accident occurs—thousands? Millions? More? 

Flying may seem like a dangerous endeavor to some, but there is no form of mass transportation safer since 99.9999% of flights land without incident. Companies like Tesla and Waymo now need to demonstrate a similar level of reliability despite variables far exceeding a plane flying through a relatively less crowded sky. 

For that you need extensive, detailed data — the kind that Martinez collects with the help of the Tesla community. If you ask the company for answers, though, you’ll get none — just the opposite in fact. Instead of attempting to gain public trust through transparency, Musk’s company is currently pressing federal regulators to bury its robotaxi safety record, claiming the data must remain confidential for business reasons. 

“This shouldn’t be proprietary. You’re driving on public roads so the data needs to be made available,” he said. “The fact that they’re hiding data should tell you everything you need to know. If you really want trust, you have to have full transparency.”

Instead, Musk only releases a quarterly crash statistic for his FSD beta program, now called FSD Supervised: for the first three months of this year Teslas drove 7.44 million miles before an accident. While this is a sterling result compared to the 700,000 miles for the average American driver, these are not robotaxi miles—they rely on drivers intervening before a collision ensues. 

And even these figures, Martinez argues, should be vetted independently by regulators before being taken as credible: “If you leave it to a company, they will filter it to fit their narrative.”

Not ready to scale safely

Meanwhile, Tesla’s response seems to laugh it all off. On Monday, Musk thought it would be funny to expand the area covered by its three-week-old Austin robotaxi service to resemble a giant penis when seen on a map. 

“Harder, better, faster, stronger,” the $1 trillion company wrote on Monday, a double entendre referencing the synth pop track of the same name by Daft Punk, a duo appropriately known for performing as robots. Musk approvingly reposted the phallus-shaped service map, adding the fare would now be hiked to $6.90 per ride from $4.20 previously, both numbers the 54-year old often employs for comical effect.

In short, the geographic expansion seemed more like a PR stunt more than anything else. The number of cars collecting fares has not appeared to change; Tesla continues to limit the number of people that can use the service; and human safety monitors still sit in the vehicle.

On the prediction site Polymarket, speculators have put the probability Tesla will have a fully functioning robotaxi service anywhere in the country at anytime during the rest of this year at just 42%, down from a high of 86% one month ago.

“It shows they’re not ready to scale, and if they did try to prematurely scale, they’re going to run into problems,” Martinez says. “Then you’re putting people at risk. Yes, maybe it’s a lower risk compared to a drunk driver, but it’s still a risk.”

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