Tesla (NASDAQ:TSLA) shares tumbled over 5% in early U.S. trading on Thursday following CEO Elon Musk’s cautionary remarks about challenging times ahead for the electric vehicle maker amid softening demand and diminishing government incentives.
The company is struggling with a notable drop in vehicle deliveries, compounded by the looming expiration of a federal tax credit aimed at encouraging EV purchases.
Musk, whose political ties to former President Trump have recently come under scrutiny, told analysts that Tesla might face “a few rough quarters.”
“I’m not saying we will, but we could — you know, Q4, Q1, maybe Q2, but once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I think I’d be surprised if Tesla’s economics are not very compelling,” Musk explained.
In an interview with the Wall Street Journal, Musk emphasized that Tesla is still in the “early stages” of developing autonomous driving technology, which he hopes will generate new revenue streams to offset declining car sales.
Overall revenue declined 12% to $22.5 billion, while net income fell to $1.17 billion from $1.4 billion a year earlier. Earnings per share matched expectations at $0.40, aligned with analysts’ forecasts of $0.40 on $22.4 billion revenue, according to Investing.com.
Canaccord Genuity analysts described Tesla’s revenue results as possibly the low point of a broader growth cycle but cautioned that the figures remain “ugly.”
“Look, we love robotaxis. And robots. Over time, Tesla is well positioned to benefit from these future-forward opportunities. But we love growth too, in the here and now,” the analysts said.
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