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Tesla shares fell 10 percent on Wednesday after sluggish sales, employee layoffs and an unprecedented investment in its artificial intelligence infrastructure hit the world’s biggest electric-car maker’s quarterly profit.
Second-quarter net income fell 45 per cent to $1.47bn, well short of analysts’ consensus estimate of $1.9bn.
Elon Musk, Tesla’s billionaire chief executive, used the company’s quarterly earnings announcement after the stock market closed on Tuesday to officially postpone the planned launch of Tesla’s first “robotaxis” – self-driving taxis.
Despite the two-month delay from August to October, Musk said the plan to turn all Tesla vehicles into a “giant autonomous fleet” could value the company at $5tn – more than six times its current market value.
Tesla shares fell 10 percent to $222 in early trading Wednesday.
Tesla’s revenue rose 2 per cent to $25.5bn, well below expectations, helped by unusually large regulatory credits related to emissions requirements and record growth in its energy storage business.
The energy storage business, which makes batteries for homes and businesses, used 9,400 megawatt hours in the second quarter, more than double its quota in the first three months of the year.
However, Tesla’s operating costs rose 39 per cent in the quarter to nearly $3bn. In April, it announced plans to cut 10 percent of its workforce, about 14,000 people, incurring major restructuring and legal costs.
Tesla is also investing heavily in its AI infrastructure, including expanding its “gigafactory” in Texas with 50,000 supercomputer H100 chips for fully self-driving training.
Tesla’s gross margin fell to 18 percent in the quarter, down from 29.1 percent in the first quarter of 2022. The closely watched fiscal measure was complimented by the receipt of $890 million in revenue from regulatory credits related to emissions requirements. Leg. Without them, Tesla’s vehicle gross margin would have dropped to 14.6 percent.
Musk has focused on an autonomous taxi service in recent months, prioritizing the development of a long-awaited affordable EV, unofficially known as the Model 2, which costs $25,000. He first outlined plans for a shared network of fully autonomous vehicles in 2016, which he said would help Tesla owners offset the cost of owning their vehicles.
Musk has also increased Tesla’s focus on developing Optimus, an autonomous humanoid robot. On Tuesday, he said Optimus robots are already performing tasks at Tesla factories and will begin limited production next year. Musk said Tesla expects to produce robots for consumer use by 2026.
“Tesla’s value, in large part, is autonomy,” he said. “If you believe Tesla will solve autonomy, you should buy Tesla stock, and all other questions . . . are noise.”
Earlier this month, Tesla said it delivered nearly 444,000 EVs between April and June, down 4.7 percent from a year earlier, but rebounding from a disappointing 387,000 in the first quarter. Sales were good enough to maintain its position as the largest EV company ahead of China’s BYD.
Even by Musk’s standards, Tesla has had an eventful 2024. The billionaire businessman took two controversial votes at the company’s annual meeting last month when shareholders re-approved his historic $56bn payout, which was overturned by a Delaware court – and backed a proposal. To re-incorporate the company in Texas.
He followed those wins by pledging to move his social media company X and the SpaceX spacecraft team from California to Texas as part of a long-running dispute with California Gov. Gavin Newsom.
Musk has emerged as one of the key Silicon Valley figures who backed former President Donald Trump in the US election in November.
Musk endorsed Trump after the July 13 assassination attempt on the former president and helped form a political action committee through which many tech investors and business executives would donate to his campaign. Musk has denied reports that he is personally donating $45 million a month to the Trump campaign.
Trump has vowed to end federal support for EVs, which he accuses of damaging America’s auto industry and criticizes as too expensive and made in China.
However, he has softened his stance in recent months as he has intensified his relationship with Musk. “I keep talking about electric vehicles, but that doesn’t mean I’m against them. I’m totally in favor of them,” Trump said at a rally in Michigan last weekend.
Tesla’s stock has fallen 8 per cent over the past 12 months and its market capitalization has almost halved from its peak of $1.2tn in November 2021.
Additional reporting by Nicholas Mega
