Elon Musk warns of a ‘few rough quarters ahead’ for Tesla as sales revenue dives

Elon Musk has warned Tesla faces “a few rough quarters” after the company reported a 16 per cent decline in automotive revenue as sales fell for a second-straight quarter and again trailed analysts’ estimates.

Tesla shares dipped by more than 4 per cent after hours in the US overnight Thursday, following remarks by Musk and finance chief Vaibhav Taneja about higher tariff costs and the expiration of federal electric vehicle tax credits.

“We probably could have a few rough quarters. I am not saying that we will, but we could,” the chief executive said.

Auto revenue for Tesla came in at $US16.7 billion ($25.3b) in the second quarter, down from $US19.9b in the same quarter last year. Of that sum, revenue from sales of auto regulatory credits declined to $US439m from $US890m a year earlier.

In early July, Tesla reported a 14 per cent year-over-year slide in vehicle deliveries to 384,000 for the second quarter. Deliveries are the closest approximation of EV sales reported by Tesla but aren’t precisely defined in its shareholder communications.

Tesla’s slump this year is partly due to backlash against the company in the US and Europe, after Musk spent heavily to help re-elect President Donald Trump, endorsed Germany’s extreme anti-immigrant AfD party and then led the Trump administration’s Department of Government Efficiency, or DOGE.

There, Musk slashed the federal workforce, rolled back regulations and eliminated the United States Agency for International Development.

The company’s shares were down about 18 per cent for the year as of their last close, making it the worst performance among tech’s megacaps. The Nasdaq is up about 9 per cent in 2025.

The stock was flat in extended trading until the earnings call, but it began to dip after Taneja said the so-called “big beautiful bill” recently passed by Congress would affect Tesla’s business. The bill ends a federal $US7500 EV tax credit at the end of September.

Tesla has also shifted aspects of its supply chain to deal with Trump’s tariffs.

“Given the abrupt change, we have limited supply of vehicles in the US this quarter,” Taneja said. “We may not be able to guarantee delivery orders placed in the later part of August and beyond.”

Tesla’s net income fell to $US1.17b in the second quarter, from $US1.4 billion a year earlier.

In its shareholder deck, Tesla said it began its “first builds of a more affordable model in June, with volume production planned for the second half of 2025”.

Tesla has to this point put off the production of a less pricey “model 2” EV. Meanwhile, other automakers are now offering a greater variety of vehicles, and China-based competitors are selling affordable EVs with high-tech self-driving features as a standard rather than premium option.

Musk has tried to keep fans and investors focused on Tesla’s future, which he envisions as being dominated by the company’s robotaxis and humanoid Optimus robots. Musk has said Tesla’s robotaxis could work for their owners, making them money while they sleep. Optimus robots, he has said, will be so sophisticated that they can serve as factory workers or babysitters.

In June, Tesla began testing a robotaxi service in Austin, Texas, which operates in a limited area with a human valet on board. The service is accessible only to select riders, generally Tesla and Musk enthusiasts.

“We will further improve and expand the service (more vehicles covering a larger area, eventually without a safety rider) while testing in other US cities in anticipation of additional launches,” Tesla said in the shareholder deck, reiterating prior statements.

The company is significantly behind Alphabet’s Waymo, which has commercial robotaxi services that are open to the public running in several US markets, including Austin.

Musk, who has missed self-imposed deadlines around self-driving technology for more than a decade, said that Tesla’s goal is to have autonomous ride-hailing available to about half the US population by the end of this year, “subject to regulatory approvals”.

“I think we’ll technically be able to do it,” he said.

On the company’s earnings call a year ago, Musk said he didn’t foresee regulatory hurdles to a broad rollout out of Tesla’s self-driving technology in the U.S. and beyond.

In Tesla’s services and other segment, which includes revenue from its EV charging stations, gross profit rose 17 per cent year-over- year. Tesla said it was driven by “improved Supercharging gross profit generation from increased volume”, and said it has added more than 2900 net new Supercharging stalls, an 18 per cent increase from a year earlier. The company boasts 7377 Supercharger stations in its charging network.

Tesla’s digital assets are now worth $US1.24b, according to the shareholder update, up from $US722m a year ago.

CNBC