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Tesla Braces for Rough Quarters Ahead as US Ends EV Incentives By Kara Carlson 07/24/2025 03:31:39 (Bloomberg) -- Elon Musk warned of difficult times ahead for $TSLA after one of the automaker’s worst quarters in over a decade. Tesla will be in 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 administration.  Tesla reported adjusted earnings of 40 cents a share, missing Wall Street’s already lowered estimates. Revenue fell 12% to $22.5 billion, the sharpest decline in at least a decade. Vehicle deliveries slumped and the average selling price of its cars dropped. The company also reported falling sales from energy generation and storage, and said costs from tariffs increased around $300 million. The impact of the levies is expected to grow in the coming quarters. Tesla’s traditional carmaking 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.  On the conference call, executives spent relatively little time discussing the EV business, spending portions instead talking about a planned expansion of Tesla’s recently launched robotaxi service, a new diner opened in Los Angeles, and whether the company may invest in the CEO’s AI startup. Musk also reiterated his desire for a greater ownership stake in Tesla, suggesting it should be higher in order to prevent his ouster by any activist investor. His multibillion-dollar Tesla payout was gutted by a Delaware judge late last year, and the company is appealing the ruling and has moved its incorporation to Texas. “I think my control over Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy,” Musk said.  Tesla’s brand has become increasingly polarizing following Musk’s support of Trump. During his brief role helping the administration, Musk’s attempts to slash government spending generated criticism from many of Tesla’s traditionally left-leaning consumers, while some investors worried the project was a distraction. A number of analysts have adjusted their expectations downward in recent weeks.   Chief Financial Officer Vaibhav Taneja warned that the recently passed US tax-and-spending bill will hurt demand. Revenue from regulatory credits — an area that has become a significant revenue stream for the company — fell more than 26% to $439 million in the second quarter. That’s down from $595 million in the first quarter and $890 million in the same period a year earlier.