• Tesla reports a 16% decline in profits, citing intensified EV competition and the end of tax credits.
• CEO Elon Musk warns of "rough" quarters ahead until new autonomous ventures are monetized.
• Income fell to $1.2 billion amid rising operational costs and lower vehicle selling prices.
• Analysts express concerns over Tesla's stock valuation amidst worsening fundamentals.
• Musk insists a $20 trillion valuation is possible with "extreme execution" despite current challenges.

Tesla has reported a significant drop in its quarterly profits for the third consecutive quarter, with earnings falling to $1.2 billion, a 16% decrease from the previous year. This slump is attributed to heightened competition in the electric vehicle (EV) market and the impending expiration of the US$7,500 federal tax credit for EV purchases, as included in the fiscal policies under former President Donald Trump. CEO Elon Musk addressed analysts during an earnings call, stating, "We probably could have a few rough quarters. I'm not saying we will, but we could," highlighting the uncertainty surrounding the company's immediate future, particularly after the expiration of the tax incentives in September, according to Bangkok Post, The Jakarta Post, and India Times.

The company reported revenues of $22.5 billion, which is also a 12% decline from the previous year, reflecting lower auto deliveries and a decrease in average vehicle selling prices. Musk emphasized Tesla's technology advantages for long-term profitability, suggesting that the company’s challenges may worsen in the transition period as they work towards monetizing new autonomous transport ventures. "But once you get to autonomy at scale by the second half of [20]26, I'd be surprised if Tesla economics are not very compelling," Musk added, according to The Jakarta Post and India Times.

Despite the negative financial outlook, some analysts maintain a positive perspective on Tesla's long-term potential. For instance, Morgan Stanley still regards Tesla as a "top pick" due to its leadership in robotics and artificial intelligence, although they acknowledge that Musk's political controversies could exert additional pressure on the company's stock. Analysts from JPMorgan Chase, however, perceive Tesla's current stock price as "completely divorced from increasingly deteriorating fundamentals," reflecting skepticism regarding its market evaluation in light of recent performance, according to Bangkok Post, The Jakarta Post, and India Times.

In separate discussions about the company’s valuation, Musk has recently stated that while a projected valuation of $20 trillion for Tesla is achievable, it necessitates "extreme execution." He responded to analyst comments with recognition of the substantial market potential but stress on the current transition challenges, indicating a cautious optimism about future growth following the rough patch after the tax credit expiration. This acknowledges the ambitious plans Tesla holds for its future, particularly regarding innovations in autonomy and robotics, according to India Times.