Tesla stock plunges as Elon Musk warns company may face ‘a few rough quarters' ahead

Core Viewpoint - Tesla's shares fell by as much as 10% following a significant sales drop, marking the steepest decline in over a decade, with CEO Elon Musk indicating that the downturn may persist for several quarters [1][2][3] Financial Performance - Tesla reported a 16% decline in revenue from car sales, totaling $16.7 billion in the second quarter compared to the previous year, marking the second consecutive quarter of declining sales [1][9] - The company missed Wall Street's expectations for both earnings per share, reporting adjusted earnings of 40 cents versus the anticipated 43 cents, and overall revenue, which came in at $22.50 billion against an expected $22.74 billion [9] Future Outlook - Musk suggested that the negative sales trend could continue into the fourth quarter of this year and the first half of 2026, with potential improvement expected in the latter half of next year as Tesla launches its expanded "Robotaxi" service [3][4] - The company aims to have autonomous ride-hailing available to about half of the U.S. population by the end of the year, contingent on regulatory approvals [4] Market Challenges - Analysts have pointed to several factors contributing to Tesla's sales slump, including the impact of tariffs, the end of federal electric vehicle tax credits, rising competition from companies like BYD in Europe and China, and an aging car lineup [2][6][9] - The elimination of the $7,500 tax credits, which had previously supported Tesla's sales, is seen as a significant challenge for the company [5] Strategic Initiatives - Musk emphasized the importance of the Robotaxi initiative and Tesla's Optimus humanoid robots for the company's future growth [11] - Despite current challenges, some analysts maintain a bullish outlook, suggesting that Musk's focus on an aggressive AI strategy could benefit Tesla in the long run [13]