Tesla braces for rough quarters ahead as US ends EV incentives

New York (TIP)- Elon Musk warned of difficult times ahead for Tesla Inc. after one of the automaker’s worst quarters in over a decade. Tesla will be a transition period for the next year or more, losing electric vehicle incentives in the US and needing time to roll out autonomous vehicles, the chief executive officer said.
“We probably could have a few rough quarters,” Musk said. “But once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I would be surprised if Tesla’s economics are not very compelling.”
Tesla shares fell as Musk spoke after the close of US trading. The move carried over into Thursday, with the stock dropping as much as 6.7% early in the premarket session.
Musk’s comments were his starkest yet on the fallout for Tesla from the tax and spending bill President Donald Trump signed this month. In addition to phasing out $7,500 tax credits for EV purchases, the law gutted federal fuel-economy standards that have generated significant revenue for Tesla over the years.
Elon Musk warned of difficult times ahead for Tesla Inc. after one of the automaker’s worst quarters in over a decade.
Tesla will be a transition period for the next year or more, losing electric vehicle incentives in the US and needing time to roll out autonomous vehicles, the chief executive officer said.
“We probably could have a few rough quarters,” Musk said. “But once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I would be surprised if Tesla’s economics are not very compelling.”
Tesla shares fell as Musk spoke after the close of US trading. The move carried over into Thursday, with the stock dropping as much as 6.7% early in the premarket session.
Musk’s comments were his starkest yet on the fallout for Tesla from the tax and spending bill President Donald Trump signed this month. In addition to phasing out $7,500 tax credits for EV purchases, the law gutted federal fuel-economy standards that have generated significant revenue for Tesla over the years.
The Tesla CEO’s blasting of the bill — he called it a “disgusting abomination” — solidified Musk’s break from Trump days after he left a prominent role in the president’s administration.
Tesla on Wednesday reported adjusted earnings of 40 cents a share, missing Wall Street’s already lowered estimates. Revenue fell 12% to $22.5 billion, the steepest decline since 2012. Vehicle deliveries slumped and the average selling price of Tesla cars dropped.
The results were “noisy,” with clear challenges in the near term and no formal guidance beyond that, Truist Securities analyst William Stein said in a note.
“The company offered remarkably little detail on some of the most important factors,” including a lower-priced model and humanoid robot, Stein said. That makes “our outlook lean more on imagination than realistic targets.”
Tesla also reported falling sales at its energy generation and storage business, and said costs from tariffs increased around $300 million. The impact of the levies is expected to grow in the coming quarters, Chief Financial Officer Vaibhav Taneja said.
The company’s car business is struggling in the face of rising competition and continued fallout from Musk’s political activities. Investors have largely been willing to look past sales declines and toward the CEO’s promises related to artificial intelligence, robots and self-driving technology.
This quarter, however, Musk put more emphasis on the amount of turbulence standing in the way of Tesla starting to see payoff from these investments.
“There are some teething pains as you transition from a pre-autonomy to a post-autonomy world,” Musk said.