Tesla Shares Fall 6.5% as Musk Abandons 2025 Sales Target Warns of 'Rough Quarters' on Earnings Call

Tesla’s shares fell 6.5% in pre-market trading on Wednesday after CEO Elon Musk abandoned his 2025 sales growth target and issued a stark warning about potential “rough quarters” ahead, fueling investor concerns about the company’s near-term prospects. The stock’s decline followed an earnings call where Musk provided little concrete detail on scaling the company’s autonomous robotaxi service, despite weeks of speculation about its potential to transform Tesla’s business model [1].

The call, widely seen as lacking actionable milestones, disappointed analysts and shareholders. Musk’s team revealed that just 7,000 driverless miles had been logged by the fledgling Austin-based robotaxi fleet in its first month—a mere 20 miles per vehicle per day—while questions about removing the mandatory human safety monitor in each car remained unanswered [2]. Investors, according to Gene Munster of DeepWater Asset Management, were left craving clarity on how the service would expand and generate revenue. “I wanted to hear more details about how the master plan will advance in the near term,” he said [3].

Compounding the unease, Tesla’s core vehicle sales declined 13% in the first half of the year, with Musk confirming he had scrapped previous guidance for growth this year. He warned that “a second straight year of declining EV sales” could be possible and flagged potential challenges in Q4 and early 2026 as U.S. federal tax credits for EVs expire. The company’s low-cost vehicle, a streamlined Model Y variant, also faced delays, with production now set for Q4 2025 [4].

Musk’s comments on the robotaxi service were marked by contradictory phrasing. While he described expansion as “very cautious,” he also claimed the service would grow at a “hyper-exponential” rate, aiming to reach half the U.S. population by year-end. This ambiguity left investors skeptical, as the fleet remains limited to a dozen cars in Austin. The absence of a timeline for removing the human safety monitor—a critical step for scalability—further dented confidence. Tesla AI director Ashok Elluswamy acknowledged the need to accelerate deployment via a “driver-in-seat” service in the interim [5].

Despite these setbacks, Tesla reported some Q2 bright spots. Automotive gross margins (excluding CO2 credits) improved by 40 basis points to 15%, and record profits from industrial-size Megapack battery sales offset regulatory credit shortfalls. The company also expanded its Cortex data center, now boasting the capacity equivalent to 67,000 Nvidia H100 AI chips [6]. However, these positives failed to reassure investors, who remain fixated on the robotaxi’s progress.

The stock’s sell-off reflected broader market dynamics. Tesla’s earnings calls often trigger “buy the rumor, sell the fact” trades, but the lack of concrete roadmap details this time amplified the reaction. Munster noted that shareholders were seeking “clear expectations” on vehicle numbers in Austin and when the human supervisor would be removed—queries Tesla did not address [7]. With the company’s equity story heavily tied to the robotaxi’s success, the absence of tangible next steps has left uncertainty lingering.

Source: [1] [title: Tesla sells off after Elon Musk scraps his 2025 sales growth target and warns ‘we could have a few rough quarters’] [url: https://fortune.com/2025/07/24/elon-musk-tesla-earnings-guidance/] [2] [title: Tesla sells off after Elon Musk scraps his 2025 sales growth target and warns ‘we could have a few rough quarters’] [url: https://fortune.com/2025/07/24/elon-musk-tesla-earnings-guidance/] [3] [title: Tesla sells off after Elon Musk scraps his 2025 sales growth target and warns ‘we could have a few rough quarters’] [url: https://fortune.com/2025/07/24/elon-musk-tesla-earnings-guidance/] [4] [title: Tesla sells off after Elon Musk scraps his 2025 sales growth target and warns ‘we could have a few rough quarters’] [url: https://fortune.com/2025/07/24/elon-musk-tesla-earnings-guidance/] [5] [title: Tesla sells off after Elon Musk scraps his 2025 sales growth target and warns ‘we could have a few rough quarters’] [url: https://fortune.com/2025/07/24/elon-musk-tesla-earnings-guidance/] [6] [title: Tesla sells off after Elon Musk scraps his 2025 sales growth target and warns ‘we could have a few rough quarters’] [url: https://fortune.com/2025/07/24/elon-musk-tesla-earnings-guidance/] [7] [title: Tesla sells off after Elon Musk scraps his 2025 sales growth target and warns ‘we could have a few rough quarters’] [url: https://fortune.com/2025/07/24/elon-musk-tesla-earnings-guidance/]