Experiencing the impact of price reductions while investing heavily in autonomous driving and other technologies, Tesla reported a significant drop in profit for the second quarter.
In Q2, Elon Musk’s electric vehicle company posted profits of $1.5 billion, a 45% decrease, on revenues of $25.5 billion, reflecting a two percent increase fueled by growth in its energy generation and storage division.
Tesla’s earnings per share failed to meet analyst projections, although its revenues surpassed expectations.
Amid intensifying competitive pressures leading to multiple price cuts across major markets, Tesla reduced its global workforce by 10% this year, totaling around 14,000 employees, in an effort to trim costs for significant new investments.
This restructuring resulted in one-time costs of $622 million in Q2 due to severance and related expenses, as per Chief Financial Officer Vaibhav Taneja.
While vehicle sales were lower compared to the same period last year, they showed improvement from the first quarter as Tesla noted a better overall consumer sentiment.
Although anticipating a “notably lower” growth in vehicle volume compared to the previous year, Tesla highlighted the upcoming production of new, more affordable models in the first half of 2025.
In April, Musk accelerated the timeline for these models, receiving positive feedback from Wall Street and hinting at their unveiling in a product launch event, without providing further details during the recent announcement.
Tesla aims to achieve profitability with its distinctive Cybertruck by the end of 2024 as production scales up.
Committing to advancements in artificial intelligence and autonomous driving, Tesla delayed a highly anticipated robotaxi event scheduled for August until October this year.
Musk explained that pushing back the timeline allowed for enhancements to the robotaxi and additional features, with the product unveiling now set for October 10.
With a track record of bold predictions around autonomous vehicles, Musk expressed confidence in achieving full autonomy for the robotaxi by the end of 2024, contrasting with past projections that missed timelines.
Meanwhile, Musk’s recent vocal support for Donald Trump in the 2024 presidential election has raised eyebrows, given the former president’s stance on climate change, a priority for Musk.
With Tesla shares exhibiting minimal movement in 2024 ahead of the earnings report, CFRA analyst Garrett Nelson downgraded the stock to “hold” from a previous recommendation to buy, attributing the shift to the delayed robotaxi event lacking near-term catalysts.
As a result, Tesla shares dipped by 7.8% in after-hours trading following the earnings announcement.
AFP