Tesla reported weaker-than-expected earnings for the Q2 as automotive sales dropped for a second straight period. Tesla share price was down more than 8% in extended trading. Tesla on Tuesday reported its lowest profit margin in more than five years and missed Wall Street earnings targets in the Q2. This is as the electric vehicle maker cut prices to revive demand while it increased 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 achieving less cost reduction than previously expected.
Tesla’s quarterly results
Tesla earnings per share: 52 cents adjusted vs 62 cents expected, per LSEG consensus estimates.
Tesla revenue: $25.50 billion vs. $24.77 billion expected by LSEG
Revenue increased 2% from $24.93 billion a year earlier, Tesla said in an investor deck on Tuesday. But automotive revenue dropped 7% to $19.9 billion from $21.27 billion in the same quarter a year ago. Auto revenue included regulatory credits of $890 million, more than triple the figure from last year.
The company said it “recognized record regulatory credit revenues in Q2,” pointing to the fact that other automakers are “still behind on meeting emissions requirements.”
After a rocky first half of the year that saw Tesla cut more than 10% of headcount, the company reported better-than-expected deliveries for the Q2 earlier this month. However, deliveries were still down from a year earlier for a second straight period.
Tesla’s self-driving technology
Musk has been promising since about 2016 that Tesla will turn its existing EVs into self-driving vehicles with software updates, which the company calls Full Self-Driving. Tesla is separately working on a CyberCab dedicated robotaxi.
On Tuesday’s call, Musk said he doesn’t foresee regulatory hurdles to rolling out Tesla’s self-driving technology to a broad market in the U.S. and beyond.
He also referred to Waymo’s commercial robotaxi services as “limited” and “fragile.” Tesla’s system, he said, should be able to work anywhere in the world, not just in a geographically-limited area.
Competition for Tesla
Tesla remains the top seller of electric vehicles in the U.S. by far, but is losing market share to a growing number of rivals due in part to its aging lineup of sedans and SUVs and the impact of Musk’s incendiary and political commentary.
During the quarter, Tesla offered discounts and other incentives, including subsidized financing deals, in China and the U.S. to spur demand. Those deals hit the company’s profitability, with its adjusted earnings margin falling to 14.4% from 18.7% in the Q2 of 2023.
Musk told analysts on a conference call that new competitors “have discounted their EVs very substantially, which has made it a bit more difficult for Tesla.”
Rival automakers saw a 33% year-over-year jump in fully electric vehicle sales in the U.S. during the first half of 2024, while Tesla sales dropped by 9.6% in that time frame, as per report.
Tesla’s net income
Net income at Tesla declined 45% to $1.48 billion, or 42 cents a share, in the Q2 from $2.7 billion, or 78 cents a share, a year earlier.
During the Q2, Tesla increased production of its newest model EV, Cybertruck which the company now says is “on track to achieve profitability by end of year.”
Capital expenditures in the quarter increased 10% from a year ago to $2.27 billion. The company said it incurred $600 million in expenses for artificial intelligence infrastructure.
Tesla’s Robotaxi
Musk over the years has promoted Tesla as a technology company, most recently saying self-driving technology was key. Tesla said on Tuesday the “timing of Robotaxi deployment depends on technological advancement and regulatory approval.” But Musk said during the conference call, “I don’t think regulatory approval will be a limiting factor.”
Musk said Tesla has delayed the unveiling of its Robotaxi product to Oct. 10 from Aug. 8 to make some important changes to the robotaxi.
Tesla said Cybertruck production “remains on track to achieve profitability by end of year.”
Tesla said it has started validation of its first prototype Cybertruck vehicles using its breakthrough battery manufacturing technology.
Tesla’s stock update
Shares of Tesla have surged more than 30% since June 13, when shareholders voted to approve Musk’s $56 billion pay package that was invalidated by a Delaware court in January. Its shares were also boosted by hopes for robotaxis. Tesla shares are down about 0.5% for the year at Tuesday’s close, while the Nasdaq is up about 20% over that stretch. Tesla share price was down more than 8% in extended trading closing at $227.23.
