Tesla Shares Fall After Earnings Miss, Musk Warns of Challenging Quarters Ahead

The recent decline in Tesla shares following the company's disappointing earnings report has raised concerns among investors and analysts alike. In its latest quarterly results, Tesla reported a 12% drop in revenue, which was below Wall Street expectations. The company's earnings per share fell short of projections, prompting an approximately 18% decrease in stock value prior to the announcement . This downturn has led to heightened scrutiny of Tesla’s operational strategies and market position as it navigates an increasingly competitive electric vehicle landscape.

During the company’s earnings call, the shares continued to lose ground after CEO Elon Musk warned analysts of a "few rough quarters” ahead as federal incentives for EV manufacturers dry up.2 Earlier this month, President Donald Trump called for a review of subsidies awarded to Musk's companies, including Tesla, raising concerns that the carmaker could face tougher regulatory scrutiny.

Through Wednesday’s close, Tesla shares traded 55% above their April low but had fallen 18% since the start of the year, driven down in part by a public feud between Musk and Trump over the president’s now-passed "One Big, Beautiful Bill," which included a provision to eliminate the Biden-era $7,500 new EV tax credit.

try to expand Tesla’s nascent robotaxi service beyond its limited service area in Austin, Texas. He said he wants to make self-driving Tesla taxis available to half the U.S. population by the end of the year — an extremely ambitious goal that he acknowledged depends on both regulatory approvals and the service’s safety record.

Tesla’s Austin robotaxi service is small and still uses human safety observers in the vehicles, putting Tesla far behind Google spinoff Waymo, the market leader in robotaxis.

Musk said the success of the service was critical to the future of Tesla. He said he wanted to focus next on California, Arizona and Florida.

Another likely factor is increased competition among EV makers. In the U.S., the traditional automakers — who have lagged far behind Tesla on electric vehicles — are gradually eating into Tesla's market dominance. According to the latest data from Cox, Tesla accounts for 46.2% of EV sales in the U.S.; that figure used to be nearly 80%. GM now controls 13% of that market.

Elon Musk's outlook for the company remains cautiously optimistic despite the current challenges. He acknowledged that Tesla is likely to experience "a few rough quarters" ahead due to several factors impacting the electric vehicle market . Among these are the loss of U.S. electric vehicle incentives and delays in the rollout of autonomous driving technology. Musk indicated that compelling economic conditions may not return until late 2026, a prediction that could further unsettle investors already wary of Tesla's short-term performance .

Looking ahead, Musk emphasized ongoing developments in autonomous technology and plans for a new cost-effective vehicle model as potential catalysts for future growth . The anticipated launch of large-scale production for the Cybercab robotaxi by 2026 signifies Tesla's commitment to innovation despite current setbacks. Ultimately, while immediate prospects appear challenging for Tesla, strategic advancements may pave the way for recovery in subsequent years.

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Sara H

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