Tesla faces ‘a few rough quarters’ from end of US EV support — Musk

TESLA Chief Executive Officer Elon Musk said on Wednesday that US government cuts in support for electric vehicle (EV) makers could lead to a “few rough quarters” for the company before a wave of revenue from self-driving software and services begins late next year.

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Shares fell nearly 5% after Mr. Musk responded on a quarterly results conference call to questions about new US government policies under President Donald J. Trump.

Mr. Musk’s electric vehicle maker posted the worst quarterly sales decline in more than a decade and profit that missed Wall Street targets, but its profit margin on making cars was better than many feared. Mr. Musk is pursuing autonomous driving to power privately owned vehicles as well as robotaxis that it plans to put into production next year.

In the meantime, it is working on a new, cheaper car, though Chief Financial Officer Vaibhav Taneja said that production would ramp up next quarter, slower than initially expected. It produced some initial units by the end of June. The company did not provide an update on its full-year deliveries forecast, citing the economy and timing of the new car rollout.

“Tesla’s disappointing results aren’t surprising given the rocky road it’s traveled recently,” said eMarketer analyst Jacob Bourne. “A truly affordable model will hit the bullseye in terms of boosting sales if Tesla can effectively position it right without detracting from its higher-priced models.”

The second straight quarterly revenue drop, with a 12% fall, comes despite the launch of a refreshed version of its bestselling Model Y sport utility vehicle (SUV) that investors had hoped would help revive demand.