Tesla's Stock Plummets as Musk's AI Dreams Clash with Automotive Reality

Tesla's bleak margins sink shares as Musk hypes everything but cars

Tesla's shares fell 12%, wiping out $100 billion in stock value. CEO Elon Musk's talk on future products couldn't ease investors' concerns over shrinking profit margins and missed earnings estimates. Tesla's EV deliveries dropped for two consecutive quarters, forcing price cuts. Analysts doubt Tesla's ability to deploy robotaxis soon. Its market value has fallen significantly from its peak in 2021.Tesla shares tumbled 12% on Wednesday, evaporating almost $100 billion in stock market value after CEO Elon Musk's talk of humanoid robots and driverless taxis failed to comfort investors worried about the electric car maker's shrinking profit margins. Tesla posted its lowest quarterly profit margin in five years late on Tuesday, with earnings per share missing estimates for the fourth consecutive quarter. It was the biggest one-day percentage drop in Tesla's stock since 2020, and it left Tesla's market capitalization at just under $700 billion, down from over $1 trillion in 2021. Still the world's most valuable car maker, Tesla's valuation relies on investor expectations of big future profits driven by yet-to-launch products such as its promised robotaxis and robots. "All of Musk's enthusiasm on the call, outside of (energy) storage, were for products that don't exist," said TD Cowen's Jeff Osborne. Tesla's weak results, along with a report from Alphabet in which it flagged higher capital expenses, amounted to a poor start to second-quarter reports for Wall Street's most valuable companies. Google parent Alphabet's stock fell almost 5%, and the losses in its shares and Tesla's sent Wall Street into a deep sell-off as investors worried about pricey valuations. Tesla's EV deliveries have fallen for two straight quarters, and it has not introduced a lower-cost model that many expected, causing buyers to turn to rival EV makers. China's BYD , for instance, widened its sales lead over Tesla in Singapore in the first half of 2024. Tesla has been forced to cut prices and boost incentives to drum up sales of its aging vehicle line-up. Musk said rivals "have discounted their EVs very substantially, which has made it a bit more difficult for Tesla". The company said the cheaper models it expects to bring out in the first half of 2025 would result in less cost reduction than previously expected, while delaying a widely awaited event for its robotaxi to October. "Tesla is not being priced on auto, but autonomy and AI ... We believe any payoff from (Tesla's AI) initiatives (is) further out," wrote UBS analyst Joseph Spak, reiterating a "sell" rating on the stock. AI INVESTMENT Tesla's stock has recently traded at 85 times its 12-month forward earnings estimates, compared to 7 for legacy automaker Ford Motor. Musk said on Tuesday Tesla's Optimus humanoid robot had begun performing tasks autonomously in one of its facilities and that he would be shocked if there were no self-driving Tesla vehicles without human supervision next year. In 2019, Musk told investors that Tesla would be operating a network of robotaxis by 2020. He also launched a poll asking users on X if Tesla should invest $5 billion in his AI startup xAI - a quarter of which he planned to keep for investors in X. The value of X, formerly Twitter, has plunged since his $44 billion purchase of the platform. Nearly 1 million people had participated with 68% voting in favour of the investment. Wall Street analysts questioned whether Tesla will be able to overcome technical and regulatory hurdles to deploy robotaxis within the next few years. Musk said on Tuesday that Tesla pushed back the unveiling of Tesla's robotaxi to Oct. 10 from Aug. 8. It may take Tesla until the end of the decade, if then, to reach a point where its cars can drive themselves without any human intervention, said TD's Osborne. The company's price cuts and incentives pushed automotive gross margins, excluding regulatory credits, down to 14.6% in the second quarter. One of the 50 analysts covering the stock cut their rating, while there were three price target increases and two decreases, according to LSEG data. Analysts, on average, rate the stock a "hold," with a median price target of $212.50, the data shows.

Tesla slumps as Musk tethers its future to delayed robotaxis

Tesla reported another quarter of disappointing profit and postponed a highly anticipated unveiling of autonomous taxis, sending the carmaker's volatile stock plunging the most in almost four years. Tesla's shares tumbled more than 12% on Wednesday in New York, the biggest decline since September 2020. The stock had surged since the company last reported earnings, recovering from a more than 40% decline for the year. Chief Executive Officer Elon Musk confirmed the company will push back an event showcasing robotaxi prototypes by about two months to October. Sentiment had improved for Tesla following a tumultuous start to the year. The company missed expectations for vehicle sales by the biggest margin ever in the first quarter, spurring mass firings. Musk responded by talking up the work Tesla has been doing for years on autonomous driving and artificial intelligence, and the shares roared back. "The value of Tesla overwhelmingly is autonomy. These other things are in the noise relative to autonomy," Musk said Tuesday, again urging anyone who disagrees to sell the stock. Tesla will purportedly now unveil robotaxis on Oct. 10, and the cars shown will only be prototypes. More affordable models that could juice sales won't go into production until the first half of next year, at the earliest. A planned factory in Mexico is on pause until after the U.S. presidential election in November and a humanoid robot that Musk predicts will send Tesla's valuation soaring won't start selling until sometime in 2026. That combination of timelines leaves investors in something of a holding pattern as Tesla's car output and sales decline. The world's largest seller of battery-electric vehicles is well off its pace of 1.8 million deliveries last year and reiterated that volume growth will be "notably lower" in 2024. "The whole story here is about what else is to come," said Gene Munster, a managing partner at Deepwater Asset Management. While profit slumped for a third quarter in a row, revenue beat expectations, rising to a record $25.5 billion. The surprise gain was driven by growth in the company's energy generation and storage business, as well as $890 million in sales of regulatory credits to carmakers needing Tesla's help to meet emissions requirements. Musk said Tesla will manufacture new, lower-cost cars at its plant in Austin, Texas, starting in the first half of next year. The company will also make both the robotaxi -- which Munster expects to be ready no sooner than 2026 or 2027 -- and the Optimus robot in Texas. Tesla has been slow-walking previously announced plans to build a factory in Mexico and will put off a decision on that plant until after the U.S. election. Republican nominee Donald Trump, who Musk has endorsed, has repeatedly threatened to hit products made in Mexico with tariffs. "Trump has said that he'll put in heavy tariffs on vehicles produced in Mexico, so it doesn't make sense to invest a lot in Mexico if that is going to be the case," Musk said. Musk formally endorsed Trump after the former president was shot during a campaign rally in Pennsylvania earlier this month, and is involved with America PAC, a political action committee backing Trump. During Tesla's earnings call, Musk downplayed the risk Trump may pose to Tesla's business. The CEO said that if Trump returns to the White House and does away with subsidies tucked in the Inflation Reduction Act, it would be devastating for competitors and impact Tesla "slightly." In the long term, though, he said it may actually help Tesla. "We knew Tesla's base car business was struggling and expect Street numbers to trend lower post the results," Jeff Osborne, a TD Cowen analyst with a hold rating on the stock, wrote in a report to clients. "Given the hype cycle the past few weeks around AI, we would expect shares to retrace the recent rally as nothing new was offered around progress with AI."

Tesla investors sour on bleak margins, stock tanks 11%

Musk hypes everything but cars. The electric automaker reported a five-year low-profit margin and missed earnings estimates for the fourth consecutive quarter. Despite its market value of $785 billion surpassing other automakers, analysts caution that this valuation relies on future technologies yet to be realized.Tesla shares sank more than 11% on Wednesday as its shrinking auto-sales margins disappointed investors after top boss Elon Musk hyped the company's investment plans for AI and self-driving technologies. The electric automaker posted a profit margin that fell to a five-year low on Tuesday and its earnings missed estimates for a fourth straight quarter. Its market value before trading opened on Wednesday was $785 billion, far exceeding any other global auto company, but that valuation is based on it profiting from technologies that are not expected to bear fruit for some time, analysts said. As a result, shares have suffered, losing 10% over the past two years during a period when the S&P 500 index has gained more than 40%. "All of Musk's enthusiasm on the call, outside of (energy) storage, were for products that don't exist," said TD Cowen's Jeff Osborne. Tesla's EV deliveries have fallen for two straight quarters, and it has not introduced a lower-cost model that many expected, causing buyers to turn to rival EV makers. China's BYD , for instance, widened its sales lead over Tesla in Singapore in the first half of 2024. Tesla has been forced to cut prices and boost incentives to drum up sales of its aging vehicle line-up. Musk said rivals "have discounted their EVs very substantially, which has made it a bit more difficult for Tesla". The company said the cheaper models it expects to bring out in the first half of 2025 would result in less cost reduction than previously expected, while delaying a widely awaited event for its robotaxi to October. "Tesla is not being priced on auto, but autonomy and AI ... We believe any payoff from (Tesla's AI) initiatives are further out," wrote UBS analyst Joseph Spak, reiterating a "sell" rating on the stock. AI INVESTMENT Tesla shares were at $218.26 in early trading, setting them on track to lose more than $90 billion in market value. The stock trades at 85 times its 12-month forward earnings estimates, compared with 6.91 for legacy automakers like Ford. Musk said on Tuesday Optimus humanoid robot had begun performing tasks autonomously in one of its facilities and that he would be shocked if there were no self-driving Tesla vehicles without human supervision next year. He also launched a poll asking users on X if Tesla should invest $5 billion in his AI startup xAI - a quarter of which he plans to keep for investors in X. The value of X, formerly Twitter, has plunged since his $44 billion purchase of the platform. Some Wall Street analysts questioned whether the 2025 timeline for robotaxi, which is now expected to launch on Oct. 10, was realistic. "Tesla makes great cars and is likely stuck in a Level 2++ world of autonomy for several years. Eventually they may get to full Level 4 for widespread availability toward the end of the decade, if at all," said TD's Osborne. The company's price cuts and incentives pushed automotive gross margins excluding regulatory credits down to 14.6% in the second quarter. Despite the disappointing results, only one of the 50 analysts covering the stock cut their rating, while there were three price target increases and two decreases, per LSEG data. Analysts, on average, still rate the stock a "hold" though their median price target of $212.50, the data shows. (Reporting by Reshma Rockie George and Deborah Sophia in Bengaluru and Alun John in London; Editing by David Gaffen and Arun Koyyur)

Tesla earnings, vague outlook dismay investors

The problem with Tesla is its ambition and its ability to describe its dreams with specifics often collide. One could see that dilemma at work Tuesday afternoon after the company's second-quarter earnings missed estimates despite record revenue. And then CEO Elon Musk was vague about when key products would really come to fruition. The result: Tesla (TSLA) shares, down 2% to $246.38 in regular trading, dropped $24.83, or nearly 8%, after hours to $227.25. Related: Tesla will start using humanoid robots in 2025 If the $227.25 price holds on Wednesday, the shares would be down 11.4% from its July 16 close of $256.56. While that price was not a record, it was a peak price in a rally that pushed the stock up 85% from its 52-week low of $138.80. The low was reached on April 22. Tesla was the worst performer of the Magnificent Seven group of stocks on Tuesday. The top Mag 7 stock was Amazon.com (AMZN) , up 2.1% to $186.41. Tesla's shares slumped because Musk conceded expected dates for unveiling new products would be later than expected and was vague on other issues. Tesla reported earnings of 42 cents a share for the second quarter, down from 78 cents in the second quarter of 2023 and off four cents from the consensus estimate of 46 cents. The shares briefly slumped to as low as $179.95, according to Nasdaq data, because investors seemed surprised by a $622 million restructuring charge. A Barrons report said the charge related to layoffs announced earlier in 2024. That charge inflated the size of the earnings miss. Backed out, the adjusted earnings came to 66 cents a share, better than the estimate, but down 27% from a year ago, Barrons said. Another issue: Tesla's gross profit margin was just 14.6%, the lowest in five years. There was good news: Vehicle deliveries in the second quarter were higher than expected, and the battle over Musk's giant pay package was over. More Tesla: But the lack of clarity about the Robotaxi, the use of the robots and vaguess about new Full-Self-Driving features on new Tesla vehicles and the availability of a new roadster seemed to weigh most on the shares. The roadster, Musk said, will be available perhaps next year as engineering issues are resolved. Tesla has now missed earnings targets for four quarters in a row, analyst Dan Coatsworth of AJ Bell told Reuters. "There is a lot of talk about robotaxis, humanoid robots and autonomous driving, which provides an exciting narrative for investors," he said. But that "doesn't get over the fact that these are tomorrow's potential riches, not today's." Musk's titanic vision As Coatworth's comment suggests, Tesla is driven by Musk's gigantic vision for the future. The vision assumes petroleum-powered vehicles will disappear. Most vehicles will offer full-self-driving capabilities (though driver supervision is still required). Then, Robotaxis, when fully available, will make owning a car, for many people around the world, unnecessary. Musk sees people investing in Robotaxis that would be ordered about by a Tesla-operated artificial-intelligence network. It would retrieve passengers and take them to their destinations at lower costs than, say, a bus or even their personal vehicles. The profits from this business would create a business worth many trillions of dollars, he said. He likes to use the number $5 trillion and used it in Tuesday's earnings call. Musk doesn't envision too many regulatory hurdles with the getting the Robotaxi operating in Europe and China. The United States will come later. That assumes the early experience with Robotaxi operations will prove the concept is safer than driving a car yourself. Meanwhile, Musk conceded that former President Donald Trump's vow to remove federal support for electric vehicles for hurt, but his competitors would be hurt more. Related: Veteran fund manager sees world of pain coming for stocks

Tesla's auto woes crash Elon Musk's AI dreams

The electric-vehicle pioneer's second-quarter numbers, reported late Tuesday, missed analysts' expectations at most levels. The automotive gross-profit margin excluding regulatory credits -- a closely watched measure of underlying profitability in the core vehicle business -- came in at 14.6%, compared with consensus expectations of 16%, according to RBC's calculation. The stock fell roughly 8% after hours. Tesla offered financing deals during the quarter to make its vehicles more affordable. These boosted deliveries, which came in above expectations earlier this month, but at the expense of gross margin, as it now turns out. Further down the income statement, the hit to margins was exacerbated by high operating costs, but some of this will unwind. The company reported $622 million of restructuring charges for the quarter, reflecting mass layoffs following a terrible first quarter. One bright spot was the energy business, which sells battery storage units and solar panels, where revenue doubled compared with the second quarter of last year. The "services and other" business, which includes used Tesla sales, parts, insurance and the charging network, also grew strongly, with revenue up 21%. Together these units brought in revenue of $5.6 billion, 22% of the company total and enough to help it unexpectedly report top-line growth. While the services operation is closely related to the core automotive one, energy storage is a business with independent potential. At last, claims that Tesla isn't just a car company have some grounding in the numbers, rather than merely in the expansive vision of chief executive Elon Musk. Tesla's second-quarter delivery update already made the strength of the energy business clear, so this could be one reason why investors have warmed to the stock lately. But the 35% rally since last month's annual general meeting also seems connected to hopes for investments in artificial intelligence and autonomy. It was brought to an abrupt halt earlier this month when Bloomberg reported that Tesla was delaying a highly anticipated August robotaxi event that will likely tease details about its autonomy program. On Tuesday, Tesla confirmed the new date as Oct. 10. How to factor businesses at radically different stages of technological development into one stock valuation is perhaps the essential problem for Tesla investors. As Brad Cornell, emeritus professor of finance at UCLA's Anderson School of Management, puts it, even as Tesla shows signs of turning into yet another mature car company, Musk has convinced investors it has "growth options" such as robotaxis and humanoid robots. Unlike the core business, these options are virtually impossible to pin firm values on. This helps explain why Tesla is such a divisive and volatile stock. A UBS analysis earlier this month argued that the market has valued the company's automotive business fairly consistently at between $200 billion and $300 billion over the past four years, with other initiatives accounting for the rest of its wildly fluctuating market value, which now stands at roughly $790 billion. The brokerage downgraded its recommendation to sell on the basis that the post-AGM rally had, at that point, taken the proportion of Tesla's valuation represented by cars below its four-year average of 30%. One might quibble with the details, but the basic insight seems sound: It is a good idea to unload Tesla shares when hopes for unproven businesses such as autonomy completely overshadow tangible fundamentals. Every quarter, after all, the company is forced to report actual numbers, bringing AI-crazed investors crashing back to earth.

Tesla rally gives way to rout as analysts sour on the stock

The result was a resounding disappointment: The stock plunged as much as 13 per cent Wednesday, several analysts slashed their price targets and at least three downgraded their ratings on the stock. Instead of shoring up investors' confidence, Tesla reported another quarter of disappointing profits as Chief Executive Officer Elon Musk repeated some of his earlier promises about how the EV-maker will be a leader in autonomous cars. But he also confirmed an earlier report that the company was delaying the unveiling of the so-called robotaxi to October. "Investors were generally confused and lacked conviction into Tesla's 2Q print," Barclays analyst Dan Levy wrote in a note to clients. "We believe the key takeaway from Tesla's 2Q print, a miss driven by auto margins, is that for now, the focus shifts back to fundamentals." Tesla shares had risen 85 per cent between their low in April and near-term peak in early July, in part because of the broader speculation that big tech companies will benefit from breakthroughs in artificial intelligence. The rally added more than US$380 billion to the company's valuation, even as analysts' estimates for its earnings and revenue have been sliding. The second-quarter results announced on Tuesday further highlighted that dissonance. "The disconnect from reality means anything can happen," said Mike O'Rourke, chief market strategist at Jonestrading. "While it is understandable Tesla shares traded off following the report, it remains hard to understand why they were at such levels prior to the report." At the same time, while Musk has made self-driving cars a pillar of the company's future, most analysts agree that the company will need the support of its core auto business to keep generating cash flow until robotaxis are commercially viable. Yet, the results did not do enough to allay concerns about the company's EV business, which has been struggling amid a broader slowdown in demand. Tesla's earnings missed estimates for the fourth consecutive quarter and its automotive gross margin, excluding regulatory credits -- a closely watched metric -- fell to 14.6 per cent in the second quarter from 16.4 per cent in the first three months of the year. "Given the hype cycle the past few weeks around AI, we would expect shares to retrace the recent rally as nothing new was offered around progress with AI," said Cowen analyst Jeff Osborne. Analysts at Cantor Fitzgerald, CFRA and New Street Research downgraded their recommendations on the stock after the earnings. The biggest challenge for the stock in the near term is the lack of any strong catalyst that can push it higher, analysts said. The shares are already trading at an expensive multiple -- nearly 80 times forward earnings -- well above the valuations of other mega-cap technology stocks. There's a growing risk that even the October robotaxi event may not live up to the high expectations built into the stock, according to some analysts. "Tesla's Robotaxi announcement in October may be more aspirational than substantive," Sanford C. Bernstein analyst Toni Saccconaghi wrote in a note to clients.

Tesla stock is sinking because profits keep shrinking

Tesla stock was down Wednesday after the company reported second-quarter earnings that missed Wall Street's expectations and took a 45% hit to profits. The Austin, Texas-based automaker reported net income of $1.5 billion for the April to June quarter, down from $2.7 billion a year earlier. However, revenue hit $25.5 billion, a 2% increase compared to last year and above the $24.5 billion expected by Wall Street. That was thanks to growth outside the electric vehicle business, namely Tesla's energy sector. Automotive revenue fell 7% compared to a year earlier after the company delivered 443,956 units during the quarter, down almost 5% from 2023. While a better result than analysts had expected -- and a major boon for the stock -- those sales came at the cost of margins. While EV sales are growing, the pace of that growth has slowed. That, combined with increased competition from rivals, pushed Tesla to employ a number of incentives to boost sales, such as reduced interest rates and price cuts. "There have been quite a few competing electric vehicles that have entered the market and mostly, they have not done well, but they have discounted their EVs quite substantially, which has made it more a bit difficult for Tesla," CEO Elon Musk said on a call with analysts Tuesday. Musk added that he sees this as a "fairly short-term" issue for the company. Tesla stock was down more than 8% in pre-market trading Wednesday. Shares are down about 1% year to date, after staging a comeback propelled by shareholder support for Musk's $56 billion compensation package. Despite the earnings miss, there's a lot for investors to look forward to, Wedbush Securities analyst and Tesla bull Dan Ives said in a Wednesday morning note. "[T]he next phase of the Tesla growth story is around autonomous, Robotaxis, and AI playing out for Musk & Co. in our view and that vision is on the doorstep," Ives wrote. Musk announced Tuesday that Tesla has moved its robotaxi unveiling event to Oct. 10. Robotaxis, or a fleet of self-driving Teslas, are expected to serve as the backbone for an eventual ride-hailing service, and they're a major driver of enthusiasm for the stock. In response to an investor-submitted question, Musk said Tesla's first robotaxi ride will come "for sure next year." During the call, Musk repeated his belief in the value of humanoid robots like Tesla's Optimus, which he said will be used internally at Tesla next year. He upgraded his forecast for internal usage from 1,000 robots -- as of last month -- to "several thousand" by the end of 2025. Musk also said that Tesla has completed "most of the engineering" of the next-generation Roadster sports car, which Musk has boasted would be able to hit 60 miles per hour in under a second and would be marked with a $200,000 price tag. The electric car was initially expected to launch by 2021.

Analysts race to reset Tesla stock price targets after earnings

Tesla shares slumped lower in early Wednesday trading as analysts moved quickly to revisit their ratings and price targets on the carmaker following a disappointing second quarter earnings report. Tesla (TSLA) , which had rallied nearly 25% since reporting a surprise beat in second quarter deliveries, posted a nearly halving in overall profits thanks in part to an ongoing EV price war and rising operating costs. The group posted a bottom line of 52 cents per share, a 43% slump from the same period last year that missed Wall Street's forecast of 62 cents. Group revenues, however, managed to rise 3% from last year to $25.5 billion, thanks in part to the stronger-than-expected delivery tally. That didn't translate into firmer profit margins, however, and Tesla's gross margin tally of 14.6% not only missed Street forecast, but was the lowest overall figure in at least five years. Tesla reiterated its earlier view that full-year deliveries would be "meaningfully lower" than last year's record tally of around 1.81 million, but CEO Elon Musk leaned into the group's ambition to introduce a new, lower-priced model by the first half of next year. Robotaxi delay He also confirmed that the group would unveil its robotaxi prototype on October 10, following reports that the event would be delayed from its August 8 scheduling, owing to what he called "some important changes that I think would improve the vehicle". Musk also doubled-down on the group's new tech future, telling analysts on the post-earnings conference call that "the world is headed for a fully electrified transport" that includes not just cars, but aircraft and boats as well. "Anyone who doesn't believe that Tesla would solve vehicle autonomy should not hold Tesla stock," Musk said. "They should sell their Tesla stock." Related: Tesla earnings and vague outlook dismay investors and analysts "If you believe Tesla will solve autonomy, you should buy Tesla stock. And all these other questions are in the noise." The results, however, as well as Musk's always-bullish commentary have drawn a mixed reaction from Wall Street, with the stock poised for a big opening bell decline and analyst looking to tweak their ratings and price targets as a result. Wall Street revisits price targets "While Tesla shares have rebounded strongly in recent months, with the Robotaxi Day having been delayed until October, we see little in the way of near-term catalysts for the story," said CFRA analyst Garrett Nelson, who lowered his Tesla price target by $10, to $240 per share, following last night's earnings. "We move to the sidelines on valuation and pending greater clarity on intermediate-term growth drivers, but we continue to believe in the long-term story," Nelson added. That thesis was evident in a number of notes and updates, including from Cantor Fitzgerald analyst Andres Sheppard, who held his 'overweight' rating and $230 price target in place following last night's earnings. Related: Tesla will start using humanoid robots in 2025 "Although we don't expect (the robotaxi segement) to launch prior to 2027, we do expect it to be a meaningful business segment for the company over the long term," said Sheppard. "We also expect future revenues from (self-driving) and robotaxis to be fundamental to Tesla's bullish thesis over the long term," he added. Jefferies analyst Philippe Houchois, who kept his $165 price target and 'hold' rating in place following last night's update, was more focused on the impact of Tesla's energy storage business, which saw revenues double from last year to just around $3 billion. He was also less than impressed with Musk's performance on the post-earnings call. Wall Street revisits price targets "Q2 results mostly confirmed the growing importance of storage (16% of gross profit) and a return to positive free cash flow ($1.3 billion) on modest working capital reversal and reduced capex but also as record (zero emission vehicle income ($890 million)," Houchois said. "Tesla's earnings call and Q&A circled around mostly known topics with reiteration of earlier comments on TAMs (Humanoids>Robotaxis>Cars), vague comments on the robotaxi business models and very little incremental information," he added. On the bullish side, Baird analyst Ben Kallo held his 'outperform' rating and $260 price target in place and suggested the post-earnings pullback could be a buying opportunity into the autumn robotaxi event. Related: Tesla Q2 deliveries surprise sends stock soaring despite China slump "Commentary indicates weaker auto margins may persist throughout the year, but strength in the Energy segment and increased regulatory credits could offset these challenges," Kallo said. "Crucially, timelines for the Robotaxi unveil and next-generation vehicle remain intact, alleviating concerns of delays." Two other Wall Street analysts kept their Tesla price targets unchanged after last night's update, including Dan Levy from Barclays, who left it at $225 per share, and Ronald Jewsikow from Guggenheim, who reiterated his $134 objective. More Tesla: Goldman Sachs analyst Mark Delaney, meanwhile, lowered his price target by $25, to $230 per share while keeping a 'neutral' rating in place. Wedbush analyst Dan Ives, meanwhile, simply noted that the "bull/bear debate on Tesla will rage on today", given the mixed nature of last night's earnings report and product update, as he held his 'outperform' rating and $300 price target in place. "Bears will focus on the auto gross margin miss and massive EV regulatory credits boosting results, which we ultimately view as table stakes in the broader Tesla story," Ives said. "(But) The EV demand story is stabilizing in China for Tesla, price cuts are mostly done, and the mojo is back at Tesla with AI front and center," he argued. Tesla shares were marked 8.5% lower in premarket trading to indicate an opening bell price of $225.43 each Related: Veteran fund manager sees world of pain coming for stocks

Not all Tesla fans and analysts are seeing Musk's AI vision

It is no secret that Elon Musk envisions Tesla (TSLA) as more than just a company that only makes electric cars. In April 2024, during Tesla's 2024 first-quarter earnings report, Musk sternly warned investors that the company "should be thought of as an AI robotics company." "If you value Tesla as just an auto company -- it's just the wrong framework," Musk said. "If you ask the wrong question, the right answer is impossible." Fast forward to July 23, and Musk's sentiment has not changed. "The value of Tesla overwhelmingly is autonomy. These other things are, I think, no way it's relative to autonomy," he said. "I recommend anyone who doesn't believe that Tesla would sell vehicle autonomy should not hold Tesla stock. They should sell their Tesla stock. If you believe Tesla will sell autonomy, you should buy Tesla stock. And all these other questions are in the noise." A mixed bag of Musk The rhetoric delivered during the earnings call has triggered a mixed reaction from analysts who listened in. Some analysts maintained their bullish, including Wedbush's Dan Ives, who kept his "outperform" rating in a note published on July 24. He believes that Tesla's shift away from EVs is the start of something much bigger in the future. "The next phase of the Tesla growth story is around autonomous, Robotaxis, and AI playing out for Musk & Co. in our view, and that vision is on the doorstep," Ives wrote. "Musk gave a new date for the historic robotaxi rollout with October 10th being Robotaxi Day and this will unleash the beginning of the AI story at Tesla which we value at $1 trillion alone over the next few years." More Business of EVs: Conversely, Seth Goldstein at Morningstar views what was said during the earnings call differently. In his analyst note published early July 14, he wrote that he views Tesla shares as "slightly overvalued," citing that "management declined to offer vehicle-specific details" about its 'affordable vehicle.' Additionally, he pointed out that even if the company is working on autonomous vehicle technology or robotaxis, they "think Tesla may face regulatory delays in approving robotaxis as regulators, or just approving limited rollouts, leading to little incremental revenue in the coming years." Tesla reaches crossroads Automotive experts are also skeptical about Tesla's big push toward artificial intelligence. Notably, this change in direction comes at the expense of other Tesla products, especially one that could benefit overall sales of electric vehicles. In a statement to TheStreet, Jalopnik contributor Collin Woodard said that the long-awaited $25,000 'affordable' Tesla feels "like something Musk throws out there to placate the people" who think Tesla is still a serious automaker. However, with almost all the focus on other projects, the idea of a cheaper car remains far-fetched. "To be fair to Tesla, building cars is hard, and building a usable EV in the U.S. at a sub-Model 3 price point is going to be even harder," Woodard told TheStreet. "If your CEO is continually diverting resources to robotics and AI, I don't know if it's even possible. I wouldn't be surprised if it's basically at the bottom of [Musk's] priority list at this point." Related: Elon Musk thinks Tesla can make what GM, Google can't AutoForecast Solutions Global Vehicle Forecasting VP Sam Fiorani explained that Tesla is at a "crossroads." As time progresses, its products become less ubiquitous and profitable in a competitive automotive market. "In order to remain a stock market darling, Tesla needs to avoid being viewed as a legacy automaker, and they want to do that through AI, robotics, and automated driving," Fiorani said. "As has been their modus operandi, each Tesla product generates the revenue necessary to fund the next wave of products." However, as Seth Goldstein pointed out, a long process has to be completed before any of Musk's wishlist items can be fulfilled, whether through product development or regulatory approval before heading to market. Nonetheless, Woodard warned not to take Musk's words at face value. "I'm no finance or programming expert, but I'd still caution analysts to be a lot more skeptical of Musk's claims. Someone telling you that every single person on the planet is going to buy their product is always a red flag no matter how rich or successful they are." Related: Veteran fund manager picks favorite stocks for 2024

Wall Street analysts see more downside ahead for Tesla as latest earnings report lacks 'razzle dazzle'

Wall Street is bracing for a rocky road ahead for shares of Tesla on the heels of a messy second-quarter print. The electric vehicle giant fell short of Wall Street's earnings expectations , as its auto business came under pressure. Tesla posted adjusted earnings of 52 cents a share, versus an LSEG estimate of 62 cents. The company also reported a decline in its adjusted operating margin , as it spends on artificial intelligence and discounts its vehicles. The lack of "razzle dazzle" left investors and analysts focused on deteriorating fundamentals, wrote Wells Fargo's Colin Langan, who has an underweight rating on shares. "We are cautious on margins given likelihood of more price cuts & lower volumes. Moreover, we are concerned about the roll-out of their next models and their demand & margins," he added. TSLA 1D mountain Shares fall after earnings disappointment Shares slumped nearly 11% on Wednesday , with at least two firms -- New Street and Cantor Fitzgerald -- downgrading shares to neutral. "We see limited (and unreliable) valuation upside, and limited risks of material positive revisions on that time horizon," said New Street's Pierre Ferragu. "Next inflection in the stock unlikely in the next 12 months." Tesla was riding high prior to releasing its latest quarterly figures. On July 2, the company reported second-quarter delivery figures. That week Tesla shares rallied more than 27% to briefly erase a year-to-date loss . The stock is down 10% in 2024, but up more than 12% for July. TSLA YTD mountain TSLA year to date "Until Tesla is able to begin production of new lower cost models, which the company expects in 1H25, we believe pricing/incentives could remain a key demand lever and weigh on margins," added Goldman Sachs analyst Mark Delaney as he trimmed his price target and lowered EPS estimates. Delaney has a neutral rating on the stock. Some analysts also view AI initiatives from the company as fully backed into the stock. UBS analyst Joseph Spak noted the current stock price reflects a investors ascribing a "hefty value" to these plans. "To us, over the near term we see more downside to the stock if/when confidence in these initiatives waver, vs. upside from likely only incremental data points supporting the [long-term] bull case," wrote Spak. "Robo-taxi day (now 10/10) could be a sell-the-news event." Spak has a sell rating on Tesla. Long-time Tesla bear Toni Sacconaghi maintained an underperform rating following the print, viewing the risk-reward over the long run as "unfavorable." His $120 price target implies about 28% downside from Tuesday's close. "Tesla's auto business does not appear to have found a bottom in terms of margins, we continue to expect little to no growth in 2024 and 2025, and believe that in general growth stocks only work when they grow," he wrote. TSLA YTD mountain Shares this year To be sure, some firms reiterated their support for the EV company following the report. Piper Sandler's Alexander Potter upped his price target to $300 from $205 a share, citing expectations for a faster-than-expected rollout of full self-driving (FSD) capabilities. Baird's Ben Kallo also suggested that investors utilize the pullback to "buy the dip" before the company's October Robotaxi event. "We reiterate our belief that TSLA remains very well positioned longer term, and FSD and Robotaxi impact will be critical value drivers," said Stifel's Stephen Gengaro.

Tesla slides as bleak profit margins exposes need for affordable EVs

July 24 (Reuters) - Tesla shares slid 8% in U.S. pre-market trades on Wednesday after the electric vehicle maker's profit margin fell to a five-year low, raising the urgency of making lower-priced vehicles to power sales rather than relying on price cuts. Tesla's price cuts and incentives to drum up sales in a toughly contested market led to automotive gross margins, excluding regulatory credits, of 14.6% for the second quarter, missing analysts' estimates of 16.29%, per Visible Alpha. "Until Tesla is able to begin production of new lower-cost models, which the company expects in H1 2025, we believe pricing/incentives could remain a key demand lever and weigh on margins," said Goldman Sachs analysts in a note. The company's stock price tumbled 7.9% to $226.40 in early U.S. pre-market trading, setting Tesla on track to lose about $63.7 billion in market value. Tesla's EV deliveries have fallen for two straight quarters as the lack of affordable new models turns buyers to rival EV makers. These rivals, CEO Elon Musk said on a post-earnings call, "have discounted their EVs very substantially, which has made it a bit more difficult for Tesla." However, these "sequential fluctuations in automotive gross margin hardly warrant mention" given Tesla's wider ambition of commercializing self-driving software and other A.I.-enabled products, said Alexander Potter, a senior research analyst at Piper Sandler. Over the years, Musk has promoted Tesla as a technology company, with self-driving technology as the key. He said on Tuesday he would be shocked if there were no self-driving Tesla vehicles, without human supervision, next year. If not the technology, some analysts were sceptical about the timeline. "We do worry about the company's ability to secure regulatory approvals and don't see a 2025 timeline as realistic for a service offering," RBC's Tom Narayan said. Still, despite the disappointing quarterly results, only one of the 50 analysts covering the stock cut their rating, while there were three price target increases and two decreases, per LSEG data. The net result is that analysts, on average, still rate the stock a "hold" though their median price target of $212.50 indicates they expect the price to fall 13% over the next few months, the data shows. The stock had slipped 0.85% this year through Tuesday's close, compared to a 16% rise in the S&P 500 index. (Reporting by Reshma Rockie George in Bengaluru and Alun John in London, editing by Amanda Cooper and Savio D'Souza)

EV watch: Tesla skids 12% on concerns over stalling auto business; Rivian and Lucid fall

Tesla (NASDAQ:TSLA) fell 12.2% in the first half hour of trading on Wednesday after the company's Q2 earnings report and conference call update failed to impress investors. Elon Musk did not offer any new information on a mass market model, and the robotaxi event was pushed back for two months. The EV giant also warned during the conference call that tariffs on raw materials and finished goods are impacting margins on the Cybertruck and Model 3. On Wall Street, longtime bull New Street Research lowered its rating on the EV stock to Neutral. Analyst Pierre Ferragu said the Tesla (TSLA) thesis is playing out, but sees limited catalysts in the near term. "Auto margins will eventually recover, although for now demand will remain challenging for now, making little room for price stabilization; volume growth should accelerate at best in the second half of next year. Energy nicely contributes to growth already. FSD, Robotaxi, and Optimus remain longer term moonshots." After a sizable rally over the last ten weeks, TSLA cruised right up to New Street's price target, which works out to 50X the 2026 EPS estimate. Ferrago and team do not expect an inflection in the stock for the next 12 months. Meanwhile, UBS reiterated a Sell rating on Tesla (TSLA). Analyst Jospeh Spak warned that payoff from AI initiatives such as Optimus and a robotaxi fleet are further out, so on earnings updates, the realities of the business fall back to mostly to the auto side of the business. Seeking Alpha analyst Jonathan Weber said it looks like consumers are increasingly finding Tesla's (TSLA) offerings less appealing compared to what its peers are offering. "This could be due to a somewhat stale and rather limited model line-up, while the company's CEO Elon Musk has also been a somewhat controversial figure in the eyes of some consumers," he observed.

Tesla Stock Is Hit By Its Latest Earnings. Bullish Analysts Aren't Worried

Tesla (TSLA) stock tumbled Wednesday, a day after the electric vehicle (EV) maker reported weaker-than-expected earnings. The results, as well as the pile of updates offered on Tesla's conference call, left Wall Street analysts divided on the company's outlook. More bullish analysts, like those at Wedbush and Piper Sandler, were optimistic about future efforts such as Tesla's planned autonomous "robotaxis" and updates to its self-driving software. JPMorgan analysts, meanwhile, focused on Tesla's lower profits, reiterating a view that Tesla stock has become "divorced from the fundamentals." Tesla shares were recently down about 11%, roughly representing their year-to-date decline after gains earlier this month. Wedbush analysts have repeatedly called Tesla more of an artificial intelligence (AI) and robotics company than a traditional car company. They wrote Wednesday that they weren't expecting "major fireworks" from Tuesday's earnings, and were more focused on the long-term vision for the company. EV demand metrics are improving, they wrote, and Tesla's AI efforts are "on the doorstep" of starting to pay off, including with the coming robotaxis. CEO Elon Musk said during Tuesday's earnings call that a robotaxi debut event was delayed to Oct. 10 from August. Piper Sandler analysts, raising their price target to $300 from $205, citing Tesla's long-term potential with robotaxis and possible licensing deals for its self-driving technology. "Sequential fluctuations in automotive gross margin hardly warrant mention, in the context of Tesla's wider ambition," Piper Sandler analysts wrote. Bank of America analysts maintained a "buy" rating while lowering their price target to $225 from $260, cutting some 2024 estimates for Tesla while saying the company has "a number of catalysts ahead" like robotaxis and cost-cutting efforts that could drive the stock higher. JPMorgan analysts maintained an "underweight" rating and a $115 price target. The analysts said Tesla's operating profit would have been "materially worse" if it hadn't received larger benefits from regulatory credits than expected.

Tesla misses earnings targets for fourth-straight quarter

STORY: Tesla reported its lowest profit margin in more than five years on Tuesday. The world's largest maker of electric vehicles has now missed its earnings targets for four straight quarters. It's faced slower sales as well as the high costs of laying off 10% of its employees and spending on AI projects. On its quarterly earnings call, Tesla said it was on track to deliver new models in the first half of next year, including long-promised more affordable vehicles - albeit not as affordable as once expected. Reuters reported that CEO Elon Musk shelved the creation of an all-new cheaper car. Instead it launched a less ambitious, lower-cost version of its Model 3. And while Model 3s have entered New York's fleet of yellow cabs, Musk has been prioritizing self-driving robotaxis, which, alongside approval of Musks' $56 billion dollar pay package has helped boost the firm's shares more than 30% since June. However, Musk said Tuesday the launch of the so-called robotaxi was delayed from August to October. He says they need time to make important changes. Musk had said in 2022 that Tesla expected to mass-produce robotaxis by this year. He also explained the company's sales slump by saying that new competitors, quote: "have discounted their EVs very substantially, which has made it a bit more difficult for Tesla." While Tesla's sales of China-made EVs, sent to Europe and beyond, fell, BYD and other Chinese carmakers posted strong numbers. However, Tesla said Tuesday it expects an increase in production from July to September. And Musk said the firm was likely to get approval for its "supervised" Full Self-Driving software, which requires driver attention, in China and Europe by the end of this year.

Tesla investors deliver rebuke as profit pressure intensifies

Shares in Tesla have taken a hit after the electric vehicle maker published a 45% decline in quarterly profits and warned cost reduction targets were off track. The stock fell 8% in after-hours trade, leaving it on track for a decline of almost 50% in the year to date, following the release of its second quarter earnings. Chief executive Elon Musk, who cut 10% of the company's workforce at the end of April as part of a bid to reduce pressure on its bottom line, said its promised shift towards more affordable models was on track for early 2025 but proving more expensive than expected. The cost AI projects, including plans to produce and use humanoid robots, dragged too. Net profits for the April-June quarter came in at $1.48bn - down on the $2.7bn figure achieved in the same period last year. Tesla's profit margin was at its lowest level for five years. The surge of spending on restructuring and development has coincided with a series of price cuts to help drive sales. The company's electric vehicle deliveries have fallen for two consecutive quarters. Tesla is battling rising competition from Chinese producers, who are selling at a considerable discount, and slow demand stemming from a lack of affordable new models. Dan Coatsworth, investment analyst at AJ Bell, said Tesla had now missed earnings targets for four quarters in a row. "There is a lot of talk about robotaxis, humanoid robots and autonomous driving, which provides an exciting narrative for investors but doesn't get over the fact that these are tomorrow's potential riches, not today's." Thomas Monteiro, senior analyst at Investing.com, added: "Perhaps more than ever in the company's recent history, Tesla's investors need results; those will have to come fast - both for the humanoid robot and for the Robotaxi." The release date for the Robotaxi project in Europe and China has been pushed back to October from August. Tesla said on Tuesday that the "timing of Robotaxi deployment depends on technological advancement and regulatory approval." Musk said during a conference call with investors: "I don't think regulatory approval will be a limiting factor."

Tesla misses Wall Street targets as price cuts, incentives weigh

The results were a reminder of headwinds facing the company in its main auto business, even as CEO Elon Musk reoriented the carmaker to self-driving technology, helping Tesla stock recoup most of its losses this year. The second quarter marked a tumultuous period for the EV maker, with Musk shelving development of an all-new cheaper car in favor of working on creating self-driving taxis. The company also laid off more than 10% of its employees in the face of slowing sales and rising competition. Tesla said profit was also weighed down by an "increase in operating expenses largely driven by AI projects" and "restructuring charges." It previously said it expected to "recognize in excess of $350 million of costs primarily related to employee termination expenses in the second quarter of 2024." The company's electric vehicle deliveries have fallen for two consecutive quarters as the automaker battles rising competition and slow demand stemming from a lack of affordable new models. Shares of Tesla have surged over 30% since June 13, when shareholders voted to approve Musk's $56 billion pay package that was invalidated by a Delaware court in January. The company on Tuesday reported revenue of $25.50 billion for the three months ended June, compared with $24.93 billion a year earlier. Analysts on average had estimated $24.77 billion, according to LSEG data. Tesla's sales of regulatory credits nearly tripled to $890 million in the second quarter from a year earlier. "Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025," Tesla said in a statement. Tesla reiterated that cost reductions for new vehicles would be less than expected. Net income was $1.48 billion in the second quarter, compared to $2.70 billion a year ago. Adjusted earnings of 52 cents per share missed the Wall Street consensus of 62 cents, as calculated by LSEG. (Reporting by Akash Sriram in Bengaluru and Hyun Joo Jin in San FranciscoAdditional reporting by Noel Randewich in Oakland, CaliforniaEditing by Sriraj Kalluvila, Peter Henderson and Matthew Lewis)

8 Tesla Analysts Size Up Margins, FSD, Robotaxis, New EVs As Stock Tanks: 'The Realities Of Today Vs. The Dreams Of Tomorrow' - Tesla (NASDAQ:TSLA)

Positives going forward for Tesla could be FSD, robotaxis and new, lower-cost vehicles, analysts say. Tesla Inc TSLA's automotive gross margins are the headline takeaway from the electric automaker's second-quarter financial results for Street analysts. Here's what analysts said about margins and upcoming catalysts. The Tesla Analysts: Bank of America analyst John Murphy reiterated a Buy rating on Tesla and lowered the price target from $260 to $255. Needham analyst Chris Pierce maintained a Hold rating. Goldman Sachs analyst Mark Delaney maintained a Neutral rating and lowered the price target from $248 to $230. Stifel analyst Stephen Gengaro reiterated a Buy rating and $265 price target. Piper Sandler analyst Alexander Potter reiterated an Overweight rating and raised the price target from $205 to $300. Cantor Fitzgerald analyst Andrew Sheppard reiterated an Overweight rating and $230 price target. RBC Capital analyst Tom Narayan reiterated an Outperform rating and $227 price target. Guggenheim analyst Ronald Jewsikow reiterated a Sell rating and $134 price target. Read Also: Tesla Stock Is Sliding Wednesday: What's Going On? Bank of America On Tesla: The electric vehicle company has several catalysts ahead after the second-quarter earnings report, Murphy said. Among the key upcoming events are the Robotaxi Day in October, new product launches, potential licensing of FSD and realized cost savings, the analyst said. "Unsurprisingly, TSLA Noted that 2024 unit growth is likely to be much slower than the 38% YoY growth in 2023 as the development of its next gen vehicle," Murphy said. The analyst said the message for Tesla going forward is clear: the company has enough capital for its product roadmap and continues to focus on reducing costs through manufacturing and operations. Needham On Tesla: Electric vehicle adoption is showing improved growth and optimism, Pierce said in a new investor note. "We remain lukewarm on TSLA-specific demand given consistent financial sacrifices being made to drive unit growth, with our auto gross margins ex regulatory credits estimates moving lower post results," the analyst said. Tesla's second half of 2024 could see modest growth for delivery figures given increased competition and difficult comparables from last year, he said. "Lower-priced offerings in 1H25 will drive a return to higher growth rates." Tesla stock trades at a high valuation given optimism for FSD and Optimus, Pierce said. "TSLA's valuation premium was easier to justify when looking at its margins on an absolute level vs. peers." Goldman Sachs On Tesla: Margins were a key item in the quarter that led to Delaney maintaining a Neutral rating and lowering Goldman's price target. "The underlying gross margin in Tesla's auto business was weaker than we had expected and below consensus, with headwinds from both price/incentives and cost qoq," Delaney said. Tesla's automotive non-GAAP gross margin was 14.6% in the quarter, below consensus estimates in the 16% range and below 16.4% in the first quarter and 18.1% in the second quarter of 2023. "Until Tesla is able to begin production of new lower cost models, which the company expects in 1H25, we believe pricing/incentives could remain a key demand lever weighing on margins." Stifel On Tesla: The company's second quarter had a mixed bag of positives and negatives and shares could continue trading lower after recent strength, Gengaro said in an investor note. The big negative in the quarter that bears will focus on is automotive margins that were hurt by lower selling prices and new financing efforts, the analyst said. Positives in the quarter for the analyst were strong energy generation and storage revenue, continued progress on Full Self Driving and plans for lower priced models being on track for the first half of 2025. "We reiterate our belief that TSLA remains very well positioned longer term, and FSD and Robotaxi impact will be critical value drivers," Gengaro said. The analyst said Tesla is well positioned for "robust multi-year growth" in 2024 through 2027 and beyond. Piper Sandler On Tesla: While automotive gross margins get the headlines, Potter said they shouldn't matter in the context of Tesla's wider ambitions of self-driving software and artificial intelligence. "TSLA's after-hours weakness likely reflects and unexpectedly large q/q decline in automotive gross margin," Potter said. The analyst raised the price target due to full-self driving comments being positive and the timeline accelerated. "Though we're boosting our FSD forecast, we're nowhere close to as bullish as Elon Musk." Cantor Fitzgerald On Tesla: Robotaxis, FSD and new vehicle models were key items from the quarter for Sheppard. The analyst doesn't expect robotaxis to launch until 2027 or after, but highlighted the importance of the segment. "We do expect it to be a meaningful business segment for the company over the long term," Sheppard said. Sheppard said revenues from FSD and robotaxis are fundamental to the bullish thesis on Tesla for the long term. "We continue to believe Tesla benefits from future upside from its Full Self-Driving software (plus upcoming Robotaxi segment), the introduction of lower-priced models, a global manufacturing footprint with economies-of-scale, and the industry's largest Charging Infrastructure." RBC On Tesla: The electric vehicle company's discounts on EV models during the quarter pressured automotive margins, Narayan said. "We would expect shares to trade lower on the Auto gross margin ex-credits, especially considering the tremendous run the stock has had in the past month," the analyst said. The analyst said commentary on robotaxis by Tesla management was "high level in nature." Narayan said he worries about Tesla being able to secure regulatory approvals for the segment, adding that the timeline is potentially unrealistic. Guggenheim On Tesla: The second quarter had several key negatives and some forward-looking positives, Jewsikow said, noting "the realities of today vs. the dreams of tomorrow" for Tesla. The headline negative was weak gross margins, the analyst said. Other negatives highlighted by the analyst are EU tariffs, the Model 3 refresh backlog being exhausted and negative demand in the second quarter. "We expect more discounting to be required to hold deliveries flat vs. 2Q as demand elasticity trends continue to skew negative," Jewsikow said. Tesla's new affordable models being on track for 2025 could be "the dreams of tomorrow," Jewsikow said. "We believe a reveal alongside the Robotaxi event is possible." TSLA Price Action: Tesla shares are down 10.2% to $221.26 on Wednesday versus a 52-week trading range of $138.80 to $278.98. Read Next: Elon Musk Thanks Shareholders, Says Tesla 'Starting A New Book,' Could Hit $30 Trillion Valuation: "Hot D***, I Love You Guys' Photo courtesy of Tesla. Market News and Data brought to you by Benzinga APIs

Tesla, Inc. : Tesla

For the second consecutive quarter, the carmaker/tech company has published declining profitability figures. A situation that jeopardizes both its nickname and its high valuation, which will be increasingly difficult to justify. The quarterly results published last night confirm the fragility of a business model and growth status in the face of the arrival of Chinese competitors specializing in entry-level products. Second-quarter net income came in at $1.45 billion, down 45% year-on-year. Sales were up 2%, below expectations of 3%. Gross margin came in at 14.7%, the lowest in 5 years and below the consensus of 16.3%. Although it exceeded expectations in terms of delivery volumes for the quarter, the group is expected to suffer a 6.5% decline in the number of Tesla units delivered in the first half of the year. Higher costs and sluggish demand due to high interest rates are to blame. On the other hand, increasing competition from low-cost Chinese carmaker BYD threatens to take away Tesla's estimated 60% market share in America, and its nickname of "Magnificent" in the process. As a sign of resistance, Elon Musk's group has announced that it will extend its range of affordable Tesla cars in 2025 with more attractive financing rates, and is playing the short circuit card by locating more production units in China and Europe. On the other hand, the group is capitalizing on its efforts to innovate with its new Cybertruck pickup, which began deliveries at the end of 2023, and its driverless robot cab, details of which will be revealed in October. Robots to save the day Although its car manufacturing division (80% of sales) is down, the energy production and storage systems division (6% of sales) has made up for the damage, at least in part. Production of its 4680 batteries rose by 51% quarter-on-quarter. In the medium term, the group plans to make more concrete progress on its "Dojo" project to develop an AI supercomputer based on D1 chips built by the company itself, in order to reduce its dependence on NVIDIA GPU chips. But above all, he is counting on his new humanoid robot Optimus, compatible with human tasks, to give Tesla a new dimension. Elon Musk is counting on this project to usher in a new era of growth. In the long term, he estimates that with all these developments, Tesla's share of automotive revenues will fall to 50%. "I think the long-term value of Optimus will exceed that of everything else in Tesla combined. So just consider a humanoid robot that can do pretty much anything you ask it to do. I think everyone on earth will want one. There are 8 billion people on earth. So, that's 8 billion right there. Then you have all the industrial uses, which is probably at least that many, if not a lot more. So, I suspect the long-term demand for generalist humanoid robots exceeds 20 billion units. And Tesla has the most advanced humanoid robot in the world and is also very good at manufacturing, which these other companies are not." Elon Musk, Tesla CEO. Is the market convinced? Not really, no. As usual, investors are only interested in the numbers. The stock fell by over 7% in after-hours trading, taking its annual loss to over 5%. If Tesla is to bounce back, it will have to be more rigorous in adapting to Chinese competition and moving forward with low-cost models. Otherwise, its growth is at stake.

Tesla share price falls 8% in extended trade as Q2 profit misses estimates | Stock Market News

Tesla share price fell 8% in extended trade after the electric vehicle (EV) maker's net profit in the second quarter missed Wall Street estimates and reported its lowest profit margin in more than five years. Tesla shares declined 7.7% to $227.23 in after-hours trade. Tesla's Q2 net income declined to $1.48 billion from $2.70 billion a year ago amid price cuts to revive demand and increased spending on AI projects. The company's adjusted earnings was at 52 cents per share, missing the Wall Street consensus of 62 cents, as calculated by LSEG, Reuters reported. Tesla said profit was also weighed down by restructuring charges and an increase in operating expenses largely driven by artificial-intelligence projects. The company laid off more than 10% of its employees to cut costs. The company reported Q2 revenue of $25.50 billion for the quarter, slightly ahead of last year and analyst targets. Tesla's Q2 automotive gross margin excluding regulatory credits was at 14.6% versus analysts' estimates of 16.3%. The company's sales of regulatory credits nearly tripled to a record $890 million in the second quarter from a year earlier. Traditional automakers buy credits from Tesla to meet clean-vehicle production regulatory targets. Tesla said it expected a sequential increase in production in the third quarter. In a conference call, Tesla CEO Elon Musk told investors that new competitors "have discounted their EVs very substantially, which has made it a bit more difficult for Tesla." Tesla delayed the unveiling of its Robotaxi product to October 10 from August 8 to make some important changes to the robotaxi. The company said "timing of Robotaxi deployment depends on technological advancement and regulatory approval." However, Musk said Tesla was likely to win regulatory approval for its "supervised" Full Self-Driving software, which requires driver attention, in China and Europe by the end of this year. Tesla share price has eased 0.8% year-to-date (YTD), while the stock surged more than 30% since June 13, when shareholders voted to approve Musk's $56 billion pay package.