Things could get worse before they get better, at least according to Tesla’s CEO, Elon Musk.
Tesla’s second-quarter earnings showed its steepest year-over-year revenue decline in at least a decade, below already grim Wall Street estimates.
After the earnings call, Tesla shares were down more than 4% in after-hours trading.
Here are the five biggest takeaways from Tesla’s call and how analysts are taking it:
1. Brace yourself for the next few quarters
The CEO told analysts Wednesday that the EV maker is heading into a “weird transition period.”
The earnings report said the problems come from “shifting tariffs, unclear impacts from changes to fiscal policy, and political sentiment.”
“Does that mean like we could have a few rough quarters? Yeah, we probably could have a few rough quarters,” Musk said on the call.
Though he added that the bumpiness isn’t guaranteed, he said the company is navigating waning EV incentives and evolving autonomous vehicle regulations.
“I think Tesla’s economics will be very compelling by the end of next year,” Musk said.
Thomas Monteiro, a senior analyst at Investing.com, wrote in a note that there are reasons to be optimistic as the company works to gain ground in India and China.
“Although still far from what fundamentals would suggest for a trillion-dollar company,” wrote Monteiro, “Tesla’s latest numbers do spark some optimism, indicating that the worst is likely behind it — at least in terms of the core auto business.”
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2. A not-so-robo taxi expansion?
Tesla executives provided some more details on robotaxi‘s progress, including a quasi-robotaxi expansion planned for the San Francisco Bay Area.
Ashok Elluswamy, Tesla’s VP of AI software, said during the call that the company is testing in other US cities and that Tesla plans to “launch” robotaxi in the Bay Area, “with a person in the driver’s seat.”
Elluswamy said having a driver behind the wheel will help expedite the expansion process as the company awaits regulatory approval in California.
With a driver in the seat, Tesla’s Robotaxi arrival in the region would look similar to Waymo’s early days in 2018.
Human safety monitors are riding along in the front passenger seat of Tesla’s robotaxis in Austin, and the service is only available to a few Tesla influencers and investors.
The company provided some other bold but broad robotaxi timelines:
- Musk said Tesla plans to expand the service in a “couple of weeks or so” as it continues its limited operation in Austin.
- Cybercab, the purpose-built robotaxi that has no steering wheel or pedals, is slated for volume production in 2026.
- Tesla owners will be able to add their personal Teslas to the robotaxi fleet by “next year,” although Musk said, “We don’t want to jump the gun.”
- The CEO said he expects Tesla’s autonomous ride-hailing service to be available to “probably half of the population of the US by the end of the year,” pending government approval.
Musk has missed deadlines for previously announced robotaxi timelines.
3. The cheaper Tesla will be a Model Y lookalike
Musk said the highly anticipated, cheaper Tesla will look “like a Model Y.”
He later added that the company anticipates the vehicle to be available to the public in the fourth quarter.
“We continue to expand our vehicle offering, including first builds of a more affordable model in June, with volume production planned for the second half of 2025,” Tesla wrote in the earnings release.
Tesla first floated the idea of a more affordable car in 2020 at the company’s “Battery Day.” Musk described a $25,000 electric car, nicknamed the “Model 2,” with a target of launching within three years, but that deadline passed without delivery.
4. Musk is concerned about his shares in the company
Musk is afraid he “can easily be ousted by activist shareholders” if his shares in Tesla decrease, alongside his control over the company.
“I think my control over Tesla should be enough to ensure that it goes in a good direction,” Musk says. “But not so much control that I can’t be thrown out if I go crazy.”
This is not a new concern for Musk.
“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control,” he posted on X in January of 2024. “Enough to be influential, but not so much that I can’t be overturned.”
His concern about activism comes as his political involvement is unpopular among some shareholders, who think it’s distracting.
5. Tesla declines to talk about xAI
Vaibhav Taneja, Tesla’s chief financial officer, didn’t want to talk about the idea of Tesla investing in Musk’s other company, xAI, saying the earnings call is “not the forum” to address the issue.
Musk, on the other hand, said that “shareholders are welcome to put forward any shareholder proposals that they’d like.”
“I recently encouraged that, and then have shareholders vote and will act in accordance with the shareholder wishes,” Musk said.
Musk had previously opposed the idea of merging xAI with Tesla, but he said he wants to put investing in the AI company to a shareholder vote in November.
Kevin Thomas, the CEO of Shareholder Association for Research and Education, previously told BI that Musk is creating “a nightmare” from “a governance point of view.”
“If this were a merger decision, at least we’d be looking at a single entity, where that company’s CEO could justifiably decide where to allocate resources between its divisions,” said Thomas. “Is it too much to ask Tesla’s CEO to work for Tesla first and foremost?”
