Tesla shares fell on Thursday after CEO Elon Musk said the company could face a “few rough quarters” as it transitions to a future focused less on selling cars and more on offering self-driving taxis.
Many prospective buyers have been turned off by Musk’s foray into right-wing politics, and the competition has ramped up in key markets such as Europe and China.
Revenue dropped by 12 per cent and profit fell by 16 per cent as the electric vehicle maker reported another quarter of lackluster financial results.
Tesla faces the loss of the $7,500 EV tax credit and stands to make much less money from selling regulatory credits to other automakers after recent changes to federal tax law.
President Donald Trump’s tariffs on countries including China and Mexico will also cost Tesla hundreds of millions of dollars, the company said on its earnings call.
Musk spent the call talking less about car sales and more about robo-taxis, automated driving software and robotics, which he says is the future of the company.
But he acknowledged those businesses are a ways off from contributing to Tesla’s bottom line.
Tesla began a rollout in June of its paid robo-taxi service in Austin, Texas, and hopes to introduce the driverless cabs in several other cities soon.
Musk told analysts that the service will be available to probably “half of the population of the U.S. by the end of the year – that’s at least our goal, subject to regulatory approvals.”
“We’re in this weird transition period where we’ll lose a lot of incentives in the U.S.,” Musk said, adding that Tesla “probably could have a few rough quarters” ahead.
He added, though, “Once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I would be surprised if Tesla’s economics are not very compelling.”
In early trading Thursday, Tesla share were down 8 per cent to around $305.
