PALO ALTO, California — Tesla reported a fourth straight year-on-year quarterly profit drop on Tuesday as the U.S. electric-vehicle maker faces weakening EV demand in key markets, including China, where heated competition has pushed local players like BYD to cut prices.

Revenue rose 2% on the year to $25.5 billion for the three months ended June. But Tesla failed to raise its profitability game in the second quarter, which has been a black eye in its earnings this year. Net income dropped 42% to $1.8 billion from the year-earlier $3.2 billion.