Tesla is bracing for “a few rough quarters,” according to CEO Elon Musk, following upcoming cuts to the US$7,500 US EV tax credit.

During a quarterly earnings call, Musk said the reduction, expected later this year, could significantly impact demand.

Tesla reported a 12% drop in revenue for Q2, falling to US$22.5 billion from US$25.5 billion a year earlier, missing Wall Street expectations.

Global deliveries fell 13.5%, while sales of automotive regulatory credits dropped 51%.

However, Tesla’s automotive gross margin, excluding credits, reached 14.96%, beating market projections due to lower production costs.

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