Tesla shares fell 8% Thursday after the company reported a second straight quarter of declining auto sales, and CEO Elon Musk told analysts that there could be a “few rough quarters” ahead due to the expiration of federal electric vehicle tax credits.

Musk’s EV maker reported a 16% decline in automotive revenue from a year earlier to $16.7 billion. Total revenue fell 12% to $22.5 billion from $25.5 billion a year earlier, missing the average analyst estimate of $22.74 billion, according to LSEG.

Tesla has been facing rising competition in key markets like China and Europe, especially from lower cost Chinese EV players. In early July, Tesla reported a 14% year-over-year slide in vehicle deliveries to 384,000 for the second quarter.

And in Europe, Tesla’s new car registrations declined last month, according to data released Thursday from the European Automobile Manufacturers Association.

Tesla shares have been hammered this year, with the stock down 24% in 2025, by far the worst performer among tech’s megacaps.

On Wednesday’s earnings call, Musk and CFO Vaibhav Taneja said that the “big beautiful bill” recently passed by Congress would affect Tesla’s business. The bill ends a federal $7,500 EV tax credit at the end of September.

Along with the struggles in Tesla’s core auto business, Musk’s own political activity has been in focus.

The world’s richest person led President Donald Trump’s Department of Government Efficiency (DOGE), slashing the size of the federal government and regulatory agencies that oversee his companies. He also endorsed Germany’s extreme anti-immigrant AfD party.

In recent months, Musk and Trump have clashed over the president’s spending bill, and Musk recently said he’s forming his own political party.

Tesla investors have been eagerly waiting for the company to release a cheaper EV model to refresh the aging lineup and perhaps reinvigorate sales. Tesla management said it started limited production of the more affordable model in June and expects to ramp it up in the second half of the year.

Still, the outlook for the rest of the year remains murky as Tesla didn’t provide any official guidance, a departure from earlier this year, when the company said growth would return in 2025.

“Management initially guided for deliveries growth in 2025,” Seth Goldstein, an analyst at Morningstar, said in a note on Wednesday. “We interpret no guidance as a signal that management is no longer forecasting olume growth. This aligns with our expectation for deliveries to decline in 2025.”