Tesla has said it will build cheaper cars and win approval for its self-driving software in Europe this year, as it tries to revive its struggling business.
Elon Musk’s electric car firm told investors it had started “first builds of a more affordable model in June” while posting a slump in car deliveries and shrinking profits.
The firm is struggling as it faces cuts to US government support for electric cars, competition from Chinese carmakers, and a brand hit from Musk’s controversial political activities.
Meanwhile, Tesla told investors US tariff policy had cost it $300m over the three months to June and warned of further pain in the months ahead.
Chief financial officer Vaibhav Taneja said the end of a tax credit for buyers of electric cars in the US is also likely to hurt.
Tesla did not provide an update on its outlook for the year, warning it was “difficult to measure the impacts of shifting global trade and fiscal policies”.
Revenue in the three months to June fell 12% year-on-year – the biggest drop in at least a decade – after deliveries plunged 14%. Profits fell 16%.
Musk told investors on Wednesday he expected the firm’s sales in Europe to increase once customers there are allowed to use the firm’s self-driving software.
He said he expected the first approval to come in the Netherlands but that the firm also hoped to win sign-off from the European Union, despite it having a “kalfka-esque” bureaucracy.
“Autonomy is the story,” Musk said. “Autonomy is what amplifies the value [of the company] to stratospheric levels.”
But the firm’s once-fat margins have shrunk sharply, with profits down in five of the last six quarters.
Shares have fallen roughly 30% from the peak last year, after Musk’s support for Trump helped win the White House.
In May, as concerns about the company mounted, the head of the company’s board had to publicly deny it had started looking for a replacement.
Investors cheered after Musk said he was leaving the Trump administration, hoping he would focus on the company and steer clear of politics.
But the messy break-up with the White House, as Musk has flirted with starting a new political party, has kept investors on edge.
Earlier this month, Tesla investor and Trump supporter James Fishback wrote to the Tesla board, calling on it to determine if his political ambitions are “compatible” with his obligations as chief executive.
Analyst Dan Ives, known as a fan of the company, also urged the board to impose guardrails, prompting Musk to snap back on social media: “Shut up, Dan”.
Musk’s “shenanigans” have cost it some of the passionate support that had allowed it to grow without spending on advertising, said Daniel Binns, global chief executive of brand consultancy Elmwood.
With Tesla now facing much stiffer competition, he said it was unlikely that the launch of a new model would fix the firm’s problems by itself.
“It will help… but it’s got to be more than just another car,” he said. “The market’s caught up to them.”
