Tesla boss Elon Musk admits the company is likely to face a "few rough quarters" as the electric vehicle business faces challenges before its move into autonomous technology ramps up.
In extended trading on Wall Street, Tesla shares slumped more than 4 per cent, and Mr Musk faced questions about the impact of US President Donald Trump's tariffs and "Big Beautiful" tax and spending bill.
Tesla reported a 12 per cent drop in revenue, its biggest quarterly sales decline in more than a decade, while profit also missed analyst forecasts.
However, its profit margin on vehicles was not as bad as some had expected.
Tesla global deliveries dropped 13.5 per cent in the second quarter. That has come before the withdrawal of the US government's $US7,500 ($11,348) tax credits for EV buyers, which the Trump administration will put an end to from September 30.
"We probably could have a few rough quarters," Mr Musk conceded.
"I'm not saying we will, but we could — you know, Q4, Q1, maybe Q2.
"But once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I think I'd be surprised if Tesla's economics are not very compelling."
Tesla also used the results announcement to tout the development of a new, cheaper vehicle, which chief financial officer Vaibhav Taneja said would ramp up production next quarter.
"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," eMarketer analyst Jacob Bourne said.
Mr Musk's far-right political views, previous affiliation with the Trump White House and work with the US Department of Government Efficiency (DOGE) had dented Tesla's brand in recent months.
It created concern among investors about his focus on Tesla, before he stepped back from DOGE, and led to protests and some consumers boycotting the brand.
Wedbush senior equities research analysts Dan Ives told The Business politics was a "lose-lose situation for Musk".
"But I feel like he's turning the corner. He's more of a wartime CEO now, trying to take this in … the AI direction, and that's what investors want to see.
"Politics is not something you want to see as part of Tesla."
Musk and Tesla bulls tout autonomy as future
Mr Musk talked up progress on the company's autonomous vehicles, as well as the share price trajectory, on the briefing with investors and analysts.
"[It] doesn't mean we're always on time but we get it done … Naysayers are sitting there with egg on their face," Mr Musk said.
"I think Tesla has a shot at being the most valuable company in the world."
He said he expected Tesla's self-driving robotaxi to roll out to around half the US population by the end of the year, as it sought regulatory approval.
A limited robotaxi trial began in Austin, Texas, in June. And the company has forecast larger-scale production of its Cybercab robotaxi to begin in 2026.
Mr Ives, who has been bullish on Tesla and the technology sector more broadly, looked past the recent issues at the company to also focus on the future.
He estimated more than 20 per cent of vehicles would be autonomous in the future and said: "Tesla's going to play a huge role."
"If you're buying the story, you're buying [Tesla shares] for the AI future. You don't own it for next quarter or two," Mr Ives said.
"I think they've turned the corner and I believe the autonomous valuation is worth a trillion [US] dollars alone to the Tesla story, and that's really our bullishness."
He estimated the stock could go to $US500 in the next year, up from $US332 currently.
Not all analysts were as positive, however. Capital.com senior financial market analyst Kyle Rodda said the "results were worse than expected and reinflamed fears that the company is in long-term decline".
ABC/Reuters
