Tesla reported a decline in second-quarter profit after a series of vehicle price cuts in response to growing competition among electric cars. (Patrick T. Fallon)
Tesla reported a sharp drop in second-quarter profit on Tuesday as it cut prices while investing aggressively in technologies such as self-driving cars.
Elon Musk’s electric-car company said revenue rose 2% to $25.5 billion on rising energy generation and storage businesses, while profit fell 45% to $1.5 billion.
Tesla’s earnings per share fell short of analyst expectations, but revenue beat expectations.
The results are the latest example of woes for Musk’s electric-vehicle giant, which is battling growing competitive pressures that have prompted a series of price cuts in key markets.
Tesla laid off 10% of its global workforce, or about 14,000 employees, this year as part of a cost-cutting effort to fund major new investments.
Chief Financial Officer Vaibhav Taneja said the restructuring also resulted in a one-time charge of $622 million in the second quarter for severance and other costs.
In its earnings release, Tesla said its auto sales were down compared to the same period a year ago but were up from first-quarter levels due to “improving overall consumer sentiment.”
Tesla reaffirmed its outlook that vehicle sales growth may be “significantly slower” than last year, but said production of new, more affordable models is expected to begin in the first half of 2025.
Musk announced the accelerated schedule in April, to cheers from Wall Street, which was clamoring for new proposals.
But he declined to provide any new details Tuesday, saying the topic would be addressed at the product launch event.
Tesla said its unconventional Cybertruck vehicle is on track to be profitable by the end of 2024 as production ramps up.
-Robo-taxi-
Tesla has vowed to continue pushing technology forward in the areas of artificial intelligence and self-driving cars.
This month, the company postponed its highly anticipated robotaxi event, which was scheduled for August, until October.
“While the timing of the introduction of robotaxis will depend on technological advances and regulatory approvals, we see tremendous potential value and are committed to the opportunity,” Tesla said in a statement.
The story continues
“The delay of a few months has given us the opportunity to refine the robotaxi and add a few other elements to our planned launch on October 10th,” Musk said on the conference call.
The outspoken Musk has a history of making bold predictions about the future of self-driving cars, saying traditional automobiles will one day become as obsolete as horse-drawn carriages.
However, Musk has missed predictions about the timeframe for self-driving technology, though he previously predicted the company would achieve a breakthrough in self-driving technology by 2018.
Musk acknowledged that his previous predictions had been “overly optimistic,” but expected robotaxis to be fully self-driving by the end of 2024, adding that “I’d be shocked if we weren’t there by next year.”
– Political uncertainty –
The results come after Musk recently stepped up his involvement in electoral politics, voicing his support for former President Donald Trump in the 2024 presidential election despite the latter’s longtime denial of climate change, a topic Musk has publicly declared a priority.
Musk formally endorsed Trump on July 13, shortly after the shocking assassination attempt on the Republican presidential candidate.
The Wall Street Journal reported this month that Musk has agreed to donate $45 million a month starting in July to America PAC, a fund working to get Trump elected.
But Tesla’s CEO acknowledged that a Trump victory could affect plans announced in March 2023 to build a new gigafactory in Mexico, as the Republican candidate has vowed to impose “heavy” tariffs on Mexican products.
“I think we’ll have to see how things go after the election,” Musk said.
Heading into Tuesday’s earnings release, Tesla shares were roughly flat for 2024.
CFRA analyst Garrett Nelson downgraded Tesla to a “hold” rating after previously recommending the stock as a buy. Nelson said he still believes in Tesla’s “long-term prospects,” but noted the company is lacking a “near-term catalyst” due to the postponement of the robotaxi event.
Noting the stock price rally in recent weeks, Nelson said he would remain cautious on valuation until the medium-term growth drivers become clearer.
Tesla shares fell 7.8% in after-hours trading.
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