Tesla Faces ‘Rough Quarters’ Ahead, Says Musk, as EV Incentives Shrink and Sales Dip
Tesla CEO Elon Musk warned investors on Wednesday that the company could face “a few rough quarters” due to reduced US government support for electric vehicles (EVs), even as he projected future gains from self-driving technology and services by late 2025.
Tesla shares fell nearly 5% after Musk’s remarks during the Q2 earnings call, where he acknowledged investor concerns over his split focus — especially after forming a new political party that has brought him into conflict with former President Donald Trump.
The EV maker reported a 12% drop in quarterly revenue, down to $22.5 billion from $25.5 billion a year ago, and its worst sales decline in over a decade. Adjusted earnings per share came in at 40 cents, below Wall Street expectations of 43 cents. Tesla’s global deliveries were down 13.5% in Q2, also missing analyst forecasts.
Still, there was a silver lining: Tesla’s automotive gross margin (excluding regulatory credits) held at 14.96%, beating expectations due to lower production costs.
Musk’s comments follow a broader shift in US policy, with the government planning to cut EV tax credits of up to $7,500 later this year. That change is expected to weigh heavily on Tesla’s near-term sales.
The company is banking on autonomous vehicles and robotaxis to drive future growth. Musk said Tesla plans to roll out its robotaxi service to about half of the US population by year-end, with a full-scale launch likely to impact the company’s bottom line from late 2025. A pilot program with self-driving Model Y vehicles has already begun in Austin, Texas.
Tesla also confirmed that volume production of a long-promised affordable EV — a simplified version of the Model Y — will begin in the second half of 2025. While some early units were produced in June, the rollout is behind initial schedules. CFO Vaibhav Taneja said production would pick up next quarter.
Despite intensifying competition from cheaper Chinese EVs and a growing backlash against Musk’s political views, Tesla is pushing forward with ambitious plans, including the development of its Cybercab robotaxi and the long-delayed Semi Truck, both expected in 2026.
Musk also highlighted progress in gaining regulatory approval for Tesla’s Full Self-Driving (FSD) software, particularly in the Netherlands, and said the company is seeking permissions in several US states including California, Arizona, Nevada, and Florida.
However, investors remain concerned about Musk’s divided attention and a string of senior executive departures, including a close aide who oversaw key markets in North America and Europe. “Autonomy is the story,” Musk reiterated, asserting that self-driving tech will eventually drive Tesla’s next phase of explosive growth.
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