Tesla Motors Chief Executive Officer Elon Musk warned of a potential rough stretch ahead after the electric vehicle maker posted one of its worst quarters in years.

Tesla shares slumped 6% in premarket.

Revenue fell 12% to $22.5 billion in the company’s second quarter — the sharpest decline in at least a decade. Adjusted earnings were 40 cents per share, Tesla said Wednesday in a statement, just below the average analyst estimate.

While the report was free of new bombshells and Tesla continues to move forward with its robotaxi and affordable-vehicle plans, the company’s call with analysts ultimately failed to assuage concerns about the path forward. An unusually subdued Elon Musk predicted the robotaxi service will expand to new cities by the end of the year, but warned that expiring incentives for EVs will have an impact on its core automotive business.

The company’s revenue drop was due to a decline in vehicle deliveries, lower regulatory credit revenue and a lower average selling price for its cars. Tesla also reported falling sales from energy generation and storage. It saw a boost from the business segment that includes its supercharging network, but Chief Financial Officer Vaibhav Taneja warned that the recently passed US tax-and-spending bill, as well as President Donald Trump’s tariffs, will hurt demand.

Transformation Pledge

Some investors are looking past Tesla’s uneven financial results and toward Musk’s promises of a future built around artificial intelligence, humanoid robots and self-driving technology.

“If one thinks Tesla is at its core just an auto business, then the results were poor,” Adam Crisafulli, founder of the market intelligence firm Vital Knowledge, said in a research note. “If one thinks Tesla is an AI/robotics juggernaut, then you will probably feel the same about its prospects after the Q2 release as you did before.”

Must reiterated the importance of autonomous driving and the company’s Optimus robot program.

“If Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy, it will be the most valuable company in the world,” Musk said during the call. He added that “there will be some teething pains” as the company invests in robotics and autonomous driving.

He said Tesla could go into depth on its humanoid robot program, AI and chip design at its shareholder meeting.

Musk also voiced concerns about the size of his stake in the company — suggesting it should be larger in order to prevent his potential ouster from an activist investor. His multi billion-dollar Tesla payout was gutted by a Delaware judge late last year. The company is still appealing the ruling and has moved its incorporation to Texas.

“I think my control over Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy,” Musk said.

Polarization

Tesla’s brand has become increasingly polarizing following Musk’s support of Trump. During his brief role helping the administration, Musk’s attempts to slash government spending generated criticism from many of Tesla’s traditionally left-leaning consumers, while some investors worried the project was a distraction. A number of analysts have adjusted their expectations downward in recent weeks.

Revenue from regulatory credits — an area that has become a significant revenue stream for the company — fell more than 26% to $439 million in the second quarter. That’s down from $595 million in the first quarter and $890 million in the same period a year earlier.

That income is expected to drop sharply as the Trump administration eliminates penalties for automakers that fail to meet federal fuel economy standards.

Tesla also reported the “first builds of a more affordable model in June.” The company had previously said production of its more-affordable model would begin in the first half of this year. The model, which Musk said would resemble a Model Y, is seen as a key factor to helping reverse the company’s recent sales declines.

On the company’s robotaxi, Tesla said it aims to further improve and expand the service, and future growth could be in the California, Nevada, Arizona and Florida. Executives estimated the network could reach “half of the population of the US by the end of the year,” but the company will still need certain regulatory approvals, including for the Bay Area where Musk said the company would expand to next.

“The guidance was very sparse,” Ben Kallo, senior analyst at Baird, said in an interview. He added that the company offered fewer forward-looking details than in the previous quarter.

“All in all, not a lot of fireworks,” he said.