Tesla (NASDAQ: TSLA) shares dropped over 8% in early U.S. trading on Thursday after CEO Elon Musk warned of potentially difficult quarters ahead, as the company faces weakening demand and reduced government incentives for electric vehicles.
Tesla has been experiencing a significant decline in vehicle deliveries, compounded by the looming phase-out of federal tax credits aimed at boosting EV sales.
Musk, whose once-close political ties with President Donald Trump have recently come under scrutiny, told analysts that Tesla might go through “a few rough quarters,” though he stopped short of confirming a downturn.
“I’m not saying it will happen, but it could—Q4, Q1, maybe Q2,” Musk said. “But once we scale autonomy in the second half of next year, certainly by year-end, I’d be surprised if Tesla’s financials aren’t looking very strong.”
In an interview with the Wall Street Journal, Musk emphasized that Tesla is still in the “early stages” of its autonomous driving journey. The company hopes that revenue from self-driving technology will help compensate for the drop in traditional car demand.
Tesla’s total revenue fell 12% to $22.5 billion, while net income declined to $1.17 billion, down from $1.4 billion the previous year. Earnings per share matched expectations at $0.40, according to estimates from Investing.com, which forecast revenue at $22.4 billion.
Analysts at Canaccord Genuity said these revenue numbers might represent the bottom of Tesla’s current cycle, yet admitted the results were far from ideal: “Look, we love robotaxis. And robots. Over time, Tesla is well-positioned to benefit from those future innovations. But we also love growth—and we’re not seeing that right now,” the note read.
