Tesla shares fall as revenue misses estimates and price cut hurts profit

Tesla on Tuesday reported its lowest profit margin in more than five years and missed Wall Street’s second-quarter profit targets, as the electric vehicle maker cut prices to revive demand while ramping up spending on AI projects.

The company said it was on track to produce “new vehicles, including more affordable models” in the first half of 2025, although the models will result in less cost reduction than previously expected.

Tesla posted an automotive gross margin excluding regulatory credits of 14.65% in the second quarter, compared with estimates of 16.29%, according to 20 analysts polled by Visible Alpha.

Its shares fell 5.2% in after-hours trading.

“Perhaps more than ever in the company’s recent history, Tesla investors need results; they will have to come quickly – for both the humanoid robot and Robotaxis,” said Thomas Monteiro, senior analyst at Investing.com

The results were a reminder of the headwinds the company faced in its core auto business, even as CEO Elon Musk refocused the automaker on self-driving technology, helping Tesla’s stock recover most of its losses. this year.

The second quarter marked a tumultuous period for the electric vehicle maker, with Musk shelving development of an all-new cheaper car in favor of work on creating self-driving taxis. The company also laid off more than 10% of its employees in the face of slowing sales and increased competition.

Tesla said profit was also weighed down by an “increase in operating expenses driven primarily by AI projects” and “restructuring charges.”

It previously said it expected to “recognize over $350 million in costs primarily related to employee termination costs in the second quarter of 2024.”

The company’s electric vehicle shipments have fallen for two straight quarters as the automaker battles growing competition and sluggish demand stemming from a lack of affordable new models. Tesla’s sales of EVs made in China, which are also exported to Europe and other regions, fell in the second quarter from a year ago, while BYD and other Chinese automakers posted strong growth in sales.

Tesla said on Tuesday that it expected a continued increase in production in the third quarter.

The company reported revenue of $25.50 billion for the three months ended June, compared with $24.93 billion a year earlier. Analysts had estimated $24.77 billion on average, according to LSEG data.

Tesla’s regulatory credit sales tripled to $890 million in the second quarter from a year ago. Traditional automakers buy credits from Tesla to meet regulatory targets of producing clean vehicles.

Net income was $1.48 billion in the second quarter, compared with $2.70 billion a year earlier.

Adjusted earnings of 52 cents per share missed the Wall Street consensus of 62 cents, as calculated by LSEG.

Robotaxis

Tesla shares have risen more than 30% since June 13, when shareholders voted to approve Musk’s $56 billion pay package, which was invalidated by a Delaware court in January. Its shares were also boosted by hopes for robotaxis.

Tesla said Tuesday that “the timing of Robotaxi’s deployment depends on technological advancement and regulatory approval.”

In April, Musk announced that the company would unveil a new robotaxis on August 8. He announced the news shortly after Reuters reported that Tesla had turned to self-driving taxis as it is expected to develop a long-promised new cheaper car. priced around $25,000. But last week, he suggested the August 8 event would be delayed to make design changes and show more models. A source said the event has been pushed back to October.

“Elon is great at dangling the carrot in front of investors, but new ideas tend to be long on vision but short on execution,” said David Wagner, head of equity and portfolio manager at Tesla investor Aptus Capital Advisors.

Musk had said in 2022 that Tesla expected to mass-produce a robotaxi without a steering wheel or pedals by 2024, after missing its self-driving vehicle targets several times.

General Motors said on Tuesday its Cruise self-driving unit will focus its development efforts on a next-generation Chevrolet Bolt after indefinitely delaying its planned Origin vehicle that would not have a steering wheel.

Tesla said Cybertruck production “remains on track to reach profitability by the end of the year.”

Tesla said it has begun proving the first prototype of its Cybertruck vehicles using its battery manufacturing technology called dry dressing, which is “a major milestone for cost reduction once scaled up.”