Tesla Reports Significant Profit Drop Amid Price Cuts and Lower Vehicle Sales

Tesla reports profit drop on price cuts, lower vehicle sales

New York (AFP) - Tesla reported a hefty drop in second-quarter profits Tuesday due to the effect of price cuts while spending aggressively on autonomous driving and other technology. Elon Musk's electric vehicle company reported profits of $1.5 billion, down 45 percent, on revenues of $25.5 billion, which were up two percent behind an increase in its energy generation and storage business. Tesla's earnings per share missed analyst expectations, while revenues exceeded them. The results are the latest in a rough patch for Musk's electric vehicle titan as it contends with rising competitive pressures that prompted a string of price cuts across leading markets. Earlier this year, Tesla laid off 10 percent of its global staff, or about 14,000 workers, as part of a push to cull expenses to finance major new investments. That reorganization also resulted in one-time expenses of $622 million in the second quarter due to severance and other costs, said Chief Financial Officer Vaibhav Taneja. While vehicle sales fell compared to the year-ago period, they rose from the level in the first quarter as "overall consumer sentiment improved," Tesla said in its earnings powerpoint. Although Tesla reaffirmed its expectation that vehicle volume growth may be "notably lower" than last year's, it said new, more affordable models are set to begin production in the first half of 2025. Musk announced the accelerated timeframe in April, winning cheers from Wall Street which had sought fresh offerings. However, on Tuesday Musk declined to offer new details, saying the topic would be covered in a product launch event. Tesla said its iconoclastic Cybertruck vehicle remains on track for profitability by the end of 2024 as it ramps up production. Robotaxi Tesla vowed to press on with technological pushes in artificial intelligence and autonomous driving. Earlier this month, the company postponed a much-anticipated robotaxi event planned for August until October. While the "timing of Robotaxi deployment depends on technological advancement and regulatory approval, we are working vigorously on this opportunity given the outsized potential value," Tesla said. The outspoken Musk has a history of making bold predictions about the prospects for autonomous vehicles, saying conventional autos will one day be as obsolete as a horse and buggy. But Musk has fallen short of projections about the timeframe for self-driving technology, after previously predicting the company would achieve the breakthrough by 2018. Musk acknowledged his "overly optimistic" prior forecasts but said he expects the robotaxi could achieve full autonomy by the end of 2024, adding "I would be shocked if we cannot do it next year." Political uncertainty The results come as Musk has lately deepened his commitment to electoral politics, coming out loudly for Donald Trump in the 2024 presidential election despite the former president's longstanding denial of climate change -- which has been a professed Musk priority. Musk formally endorsed Trump on July 13 shortly after an unsuccessful assassination attempt on the Republican presidential nominee. Musk has agreed to donate $45 million monthly to 'America PAC,' a fund focused on electing Trump, starting in July, the Wall Street Journal reported earlier this month. But the Tesla chief acknowledged that a Trump victory might affect a plan announced in March 2023 to build a new Gigafactory in Mexico, given that the Republican candidate has vowed "heavy" tariffs on Mexican goods. "I think we need to see just where things stand after the election," Musk said. Heading into Tuesday's earnings announcement, Tesla shares were essentially flat for 2024. Shares of Tesla fell 6.5 percent in after-hours trading.

Tesla Reports Profit Drop On Price Cuts, Lower Vehicle Sales

Tesla reported a hefty drop in second-quarter profits Tuesday due to the effect of price cuts while spending aggressively on artificial intelligence and other technology. Elon Musk's electric vehicle company reported profits of $1.5 billion, down 45 percent, on revenues of $25.5 billion, which were up two percent behind an increase in its energy generation and storage business. Tesla's earnings per share missed analyst expectations, while revenues exceeded them. The results are the latest in a rough patch for Musk's electric vehicle titan as it contends with rising competitive pressures that prompted a string of price cuts across leading markets. Earlier this year, Tesla laid off 10 percent of its global staff, or about 14,000 workers, as part of a push to cull expenses to finance major new investments. While overall vehicle sales fell compared to the year-ago period, they rose from the level in the first quarter as "overall consumer sentiment improved," Tesla said in its earnings powerpoint. While Tesla reaffirmed its expectation that vehicle volume growth may be "notably lower" than last year's, it said new, more affordable models are set to begin production in the first half of 2025. Musk announced the accelerated timeframe in April, winning cheers from Wall Street which had sought fresh offerings. Tesla vowed to press on with technological pushes in artificial intelligence and autonomous driving. Earlier this month, Tesla postponed a much-anticipated robotaxi event planned for August until October. While the "timing of Robotaxi deployment depends on technological advancement and regulatory approval, we are working vigorously on this opportunity given the outsized potential value," Tesla said. The outspoken Musk has a history of making bold predictions about the prospects for autonomous vehicles, saying conventional autos will one day be as obsolete as a horse and buggy. But Musk has fallen short of projections about the timeframe for self-driving technology, after previously predicting the company would achieve the breakthrough by 2018. The results come as Musk has lately deepened his commitment to electoral politics, coming out loudly for Donald Trump in the 2024 presidential election despite the former president's longstanding denial of climate change -- which has been a professed Musk priority. Musk formally endorsed Trump on July 13 shortly after an unsuccessful assassination attempt on the Republican presidential nominee. Musk has agreed to donate $45 million monthly to 'America PAC,' a fund focused on electing Trump, starting in July, the Wall Street Journal reported earlier this month. Heading into Tuesday's earnings announcement, Tesla shares were essentially flat for 2024. Shares of Tesla fell 3.0 percent in after-hours trading.

Tesla reports profit drop on price cuts, lower vehicle sales

Tesla reported a hefty drop in second-quarter profits Tuesday due to the effect of price cuts while spending aggressively on autonomous driving and other technology. - Robotaxi - Tesla vowed to press on with technological pushes in artificial intelligence and autonomous driving.Tesla reported a hefty drop in second-quarter profits Tuesday due to the effect of price cuts while spending aggressively on autonomous driving and other technology. Elon Musk's electric vehicle company reported profits of $1.5 billion, down 45 percent, on revenues of $25.5 billion, which were up two percent behind an increase in its energy generation and storage business. Tesla's earnings per share missed analyst expectations, while revenues exceeded them. The results are the latest in a rough patch for Musk's EV titan as it contends with rising competitive pressures that prompted a string of price cuts across leading markets. Earlier this year, Tesla laid off 10 percent of its global staff, or about 14,000 workers, as part of a push to cull expenses to finance major new investments. That reorganization also resulted in one-time expenses of $622 million in the second quarter due to severance and other costs, said Chief Financial Officer Vaibhav Taneja. While vehicle sales fell compared to the year-ago period, they rose from the level in the first quarter as "overall consumer sentiment improved," Tesla said in its earnings powerpoint. Although Tesla reaffirmed its expectation that vehicle volume growth may be "notably lower" than last year's, it said new, more affordable models are set to begin production in the first half of 2025. Musk announced the accelerated timeframe in April, winning cheers from Wall Street which had sought fresh offerings. However, on Tuesday Musk declined to offer new details, saying the topic would be covered in a product launch event. Tesla said its iconoclastic Cybertruck vehicle remains on track for profitability by the end of 2024 as it ramps up production. - Robotaxi - Tesla vowed to press on with technological pushes in artificial intelligence and autonomous driving. Earlier this month, the company postponed a much-anticipated robotaxi event planned for August until October. While the "timing of Robotaxi deployment depends on technological advancement and regulatory approval, we are working vigorously on this opportunity given the outsized potential value," Tesla said. The outspoken Musk has a history of making bold predictions about the prospects for autonomous vehicles, saying conventional autos will one day be as obsolete as a horse and buggy. But Musk has fallen short of projections about the timeframe for self-driving technology, after previously predicting the company would achieve the breakthrough by 2018. Musk acknowledged his "overly optimistic" prior forecasts but said he expects the robotaxi could achieve full autonomy by the end of 2024, adding "I would be shocked if we cannot do it next year." - Political uncertainty - The results come as Musk has lately deepened his commitment to electoral politics, coming out loudly for Donald Trump in the 2024 presidential election despite the former president's longstanding denial of climate change -- which has been a professed Musk priority. Musk formally endorsed Trump on July 13 shortly after a shock assassination attempt on the Republican presidential nominee. Musk has agreed to donate $45 million monthly to 'America PAC,' a fund focused on electing Trump, starting in July, the Wall Street Journal reported earlier this month. But the Tesla chief acknowledged that a Trump victory might affect a plan announced in March 2023 to build a new Gigafactory in Mexico, given that the Republican candidate has vowed "heavy" tariffs on Mexican goods. "I think we need to see just where things stand after the election," Musk said. Heading into Tuesday's earnings announcement, Tesla shares were essentially flat for 2024. CFRA analyst Garrett Nelson downgraded Tesla to "hold" after previously urging a purchase of shares. While still a believer in the "long-term story" around Tesla, Nelson cited a dearth of "near-term catalysts" due to the delay of the robotaxi event. "We move to the sidelines on valuation and pending greater clarity on intermediate-term growth drivers," Nelson said, alluding to a run-up in shares in recent weeks. Shares of Tesla fell 7.8 percent in after-hours trading.

Tesla's 2Q profit falls 45% as sales drop despite price cuts, low-interest loans

Tesla's second-quarter net income fell 45% compared with a year ago as the company's global electric vehicle sales tumbled despite price cuts and low-interest financing. The Austin, Texas, company said Tuesday that it made $1.48 billion from April through June, less than the $2.7 billion it made in the same period of 2023. It was Tesla's second-straight quarterly net income decline. Second quarter revenue rose 2% to $25.5 billion, beating Wall Street estimates of $24.54 billion, according to FactSet. Excluding one time items, Tesla made 52 cents per share, below analyst expectations of 61 cents. Shares of Tesla fell more than 8% in trading after Tuesday's closing bell. The shares had been down more than 40% earlier in the year, but have since recovered most of the losses. Earlier this month Tesla said it sold 443,956 vehicles from April through June, down 4.8% from 466,140 sold the same period a year ago. Although the sales were were better than the 436,000 that analysts had expected, they still were a sign of weakening demand for the company's aging product lineup. For the first half of the year, Tesla has sold about 831,000 vehicles worldwide, far short of the more than 1.8 million for the full year that CEO Elon Musk has predicted. The company's widely watched gross profit margin, the percentage of revenue it gets to keep after expenses, fell once again to 18%. A year ago it was 18.2%, and it peaked at 29.1% in the first quarter of 2022. Tesla said it posted record quarterly revenue "despite a difficult operating environment." The company's energy-storage business took in just over $3 billion in revenue, double the amount in the same period last year. CEO Elon Musk, who has tried to portray Tesla as an autonomous vehicle, robotics and artificial-intelligence company, told analysts on a conference call that the company's "Full Self Driving" system should be able to run without human supervision by the end of this year, although he acknowledged that his predictions "have been overly optimistic in the past." At present, "Full Self Driving" is being tested on public roads by some Tesla owners. The company says it cannot drive itself and human drivers must be ready to intervene at all times. For many years Musk has said the system will allow a fleet of robotaxis to generate income for the company and Tesla owners, making use of the electric vehicles when they would have been parked. Musk has been touting self-driving vehicles as a growth catalyst for Tesla since "Full Self Driving" hardware went on sale late in 2015. But in investigative documents, the U.S. National Highway Traffic Safety Administration said it found 75 crashes and one death involving "Full Self Driving." It's not clear whether the system was at fault. Musk told analysts he postponed the company's August robotaxi unveil until Oct. 10 to make changes to improve the vehicle. He also said Tesla will show off a "couple of other things" at the event. Musk said he expects Tesla to begin limited production of the Optimus humanoid robot early next year for use by Tesla. The robot already is doing work at a factory. In 2026, production would ramp up more to send robots to outside customers, he said. During the quarter, Tesla's revenue from regulatory credits purchased by other automakers who can't meet government emissions targets hit $890 million for the quarter, double Tesla's amount of most previous quarters. The company reported $622 million in "restructuring and other" expenses for the quarter, when it laid off over 10% of its workforce. Tesla said in a note to investors that it's between two major growth waves, with the next one coming through advances in autonomous vehicles and new models. But the company reiterated caution that its sales growth "may be notably lower than the growth rate achieved in 2023." The company said plans for new vehicles, including more affordable models, are on track for production to start in the first half of next year. Tesla has hinted at a smaller model costing around $25,000. The models are to be built using some aspects of current vehicles and others from the next-generation underpinnings. The company said average selling prices for its Models S, X, 3 and Y all dropped due to the price cuts and financing offers. It also said that the Cybertruck became the best selling electric pickup in the U.S. during the quarter.