Tesla CEO Elon Musk said the electric car brand would face “a few rough quarters”, as the company posted its worst quarterly sales decline in over a decade.
In the latest financial outlook, Tesla reported a 12 per cent drop in revenue compared to the same time last year, at just $22.5billion (£16.6billion).
Tesla’s revenue fell below Wall Street’s expectations of $22.7billion (£16.7billion), while operating income fell to $900million (£663million) – a drop of 42 per cent on 2024.
In the hours following Tesla’s financial reports, the share price of the electric car maker dropped five per cent.
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Elon Musk warned that Tesla would face issues in the coming quarters
Elon Musk, the CEO of Tesla, noted that several external factors impacted the disappointing results, including the cutting of US Government support for electric vehicles and President Donald Trump’s controversial auto tariffs.
Speaking on the quarterly results conference call, Musk admitted that Tesla could face “a few rough quarters”.
Tesla reported that it had been hit with a $300million (£221million) cost over the three months to June because of Trump’s tariffs of 25 per cent on all foreign car exports.
Paul Miller, Forrester’s VP principal analyst, commented on the data, saying Tesla experienced a difficult quarter over the last three months.
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He explained: “A lightly refreshed product offering, plus increasingly compelling alternatives from competitors in Asia, Europe and North America make it harder to sell Teslas than has been the case until quite recently.
“The withdrawal of EV incentives in several countries makes the vehicles less attractive and the full impact of tariffs imposed by the US and other countries is not yet clear.”
Musk confirmed that Tesla had started the “first builds” of more affordable models in June, with the billionaire touting the possibility of an EV with a price tag of around $25,000 or £18,434.
Tesla has been facing increased competition from several brands offering more affordable electric vehicles, particularly Chinese brands in the UK and across Europe.
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BYD, Jaecoo and Omoda are all making significant strides in developing cheaper electric vehicles with suitable battery ranges and impressive in-car technology.
Despite the concerning results, Musk said that the last three months had been “very exciting” and that the brand “has a shot of being the most valuable company in the world”.
The South African businessman also told investors that Tesla sales would increase once drivers knew they would be able to use self-driving capabilities, especially in Europe.
Tesla is expecting to receive approval for its self-driving software in the Netherlands soon and hopes to get the green light from the European Union.
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Tesla is pinning its hopes on its self-driving technology
Speaking on the conference call, Musk said: “Autonomy is the story. Autonomy is what amplifies the value [of the company] to stratospheric levels.”
Highlighting Tesla’s confidence in self-driving vehicles, Miller said: “During the investor call, Elon Musk talked about ‘getting the regulatory approvals’ to expand the Austin pilot even further, and to launch in the Bay Area, Arizona, Nevada, and Florida soon.
“He went so far as to suggest the company ‘could’ address half the US population by the end of 2025, ‘subject to regulatory approvals’.
“That caveat is an important one, as regulatory approvals take time and there is no evidence that these formal applications to the separate State regulatory processes have begun.”