Tesla shares dropped by more than 8% on Thursday, trading at $304.15 by 1415 GMT, after the electric vehicle giant reported a 16% decline in second-quarter profits. The company posted earnings of $1.2 billion, marking the third consecutive quarter of falling profits, raising fresh concerns about Tesla’s financial trajectory.
CEO Elon Musk, speaking during an earnings call, acknowledged that the company is likely to face a few more “rough quarters” before it can reap the rewards of its investments in autonomous transportation. Musk said Tesla’s long-term prospects remain strong, particularly once its self-driving technologies and other next-generation ventures are fully operational and monetized.
“We probably could have a few rough quarters,” Musk admitted, while emphasizing that Tesla’s autonomy-related operations will eventually present a “very compelling” business proposition.
Adding to the headwinds, Tesla anticipates a decline in sales after the expiration of a $7,500 federal tax credit for electric vehicles. The incentive, which has helped buoy EV sales, is set to end on September 30 under legislation signed into law by President Donald Trump.
The financial strain comes despite Musk’s significant support for Trump’s 2024 presidential campaign, with the billionaire reportedly donating over $270 million. However, tensions between the two powerful figures have simmered over Trump’s sweeping fiscal policies. At one point, Trump even floated the idea of deporting Musk during a public spat.
In an apparent attempt to ease tensions, Trump posted on social media Thursday that he had no intention of harming Musk’s business prospects. “I want Elon, and all businesses within our Country, to THRIVE, in fact, THRIVE like never before!” Trump wrote. “The better they do, the better the USA does, and that’s good for all of us.”
Despite the conciliatory message, investor confidence remains shaky as Tesla navigates regulatory uncertainty, subsidy rollbacks, and strategic pivots toward autonomous systems all of which could impact its near-term profitability.
