Tesla shares fell nearly 10% on Thursday after the company revealed its sharpest sales decline in over ten years. The electric carmaker said revenue from car sales dropped 16% year-over-year to $16.7 billion. This marked Tesla's second straight quarter of falling sales. The company also failed to meet Wall Street expectations for earnings per share and total revenue.

Elon Musk admitted that things might get worse before they get better. “We probably could have a few rough quarters,” Musk said during the earnings call. “I’m not saying that we will, but we could.” His warning shook investors and added to the stock’s downward pressure.

Musk Points To EV Credit Cuts And Global Competition

Executives said that the loss of federal EV tax credits was one reason behind the sales slump. The end of the $7,500 tax credit followed a dispute between Musk and President Trump over new legislation. Tariffs and global competition, especially from Chinese brand BYD, are also hurting Tesla’s market position.

Musk said the downturn could stretch into Q4 of 2025 and maybe Q2 of 2026. He expects improvements by late next year with the rollout of Robotaxi and Tesla’s humanoid robot Optimus. Robotaxi launched a pilot in Austin last month and is seen as Tesla’s next big step.

“We probably could have a few rough quarters,” Musk said during the company’s earnings call. “I’m not saying that we will, but we could.”

Tesla also opened a new diner in Hollywood this week. Musk said it may expand to more locations. Despite the poor results, analyst Dan Ives expressed hope. He believes Musk’s new AI-focused strategy could benefit investors in the long run.

Tesla’s stock is down 20% this year. Rising competition and outdated car models remain major concerns.