WASHINGTON - Tesla reported another drop in quarterly profits as CEO Elon Musk warned the company could face a few "rough" quarters following the elimination of federal tax credits for electric vehicles under President Donald Trump's big fiscal package.
Musk, on an earnings conference call with analysts and investors, reiterated that Tesla's technology advantages position it for significant long-term profitability, but suggested the company's recent slump would continue or worsen in a difficult interim period until new autonomous transport ventures can be monetised.
At issue is the period after the $7,500 federal tax credit for EV purchases expires on September 30, among the green tax credits zeroed out by Trump's sweeping package approved earlier this month.
"We probably could have a few rough quarters. I'm not saying we will, but we could," Musk said of a period that immediately follows the expiration of the US tax credit for EVs.
"But once you get to autonomy at scale" by the second half of 2026, "I'd be surprised if Tesla economics are not very compelling," said Musk.
His comments acknowledge more short-term pain following Wednesday's results, its third straight quarter of lower profitability as the company faces intensifying electric vehicle competition and deals with backlash due to Musk's political activities.
Tesla reported second-quarter profits of $1.2 billion, down 16 percent from the year-ago level. The company in a press release emphasised ongoing efforts to lead in artificial intelligence and robotics.
Revenues fell 12 percent to $22.5 billion.
Lower profits had been expected after Tesla earlier this month disclosed a decline in auto deliveries. Results were also impacted by a fall in average vehicle selling prices and higher operating expenses driven by AI and other research and development projects.
Tesla did not offer an outlook on full-year vehicle production, citing shifting global trade and fiscal policies, as well as factors such as "the broader macroeconomic environment, the rate of acceleration of our autonomy efforts and production ramp at our factories."