Tesla reported a sharp drop in second-quarter profit on Tuesday due to the impact of price cuts as it spends aggressively on artificial intelligence and other technologies.
Elon Musk’s electric vehicle company reported a profit of $1.5 billion, down 45 percent, on revenue of $25.5 billion, which was driven two percent by growth in its energy generation and storage businesses.
Tesla’s earnings per share missed analysts’ expectations, while revenue beat them.
The results are the latest in a sketchy update for Musk’s electric vehicle titan as it faces mounting competitive pressures that have prompted a series of price cuts in top markets.
Earlier this year, Tesla laid off 10 percent of its global staff, or about 14,000 workers, as part of a push to eliminate costs to finance major new investments.
While overall vehicle sales were down compared to the year-ago period, they were up from the first-quarter level as “the overall consumer sentiment improved,” Tesla said in its earnings powerpoint.
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While Tesla confirmed its expectation that vehicle volume growth may be “significantly lower” than last year, it said new, more affordable models are set to begin production in the first half of 2025.
Musk announced the accelerated timeline in April, earning cheers from Wall Street that had been looking for new deals.
Tesla has vowed to continue its technological push into artificial intelligence and autonomous driving.
Earlier this month, Tesla postponed a highly anticipated robotaxi event scheduled for August until October.
While the timing of Robotaxi’s development depends on technological advancements and regulatory approval, we are working hard on this opportunity given the enormous potential value,” Tesla said.
The outspoken Musk has a history of making bold predictions about the prospects for autonomous vehicles, saying conventional cars will one day be as obsolete as a horse and buggy.
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However, Musk is not living up to predictions about the timeline for self-driving technology, having previously predicted the company would achieve the breakthrough by 2018.
The results come as Musk has recently deepened his commitment to electoral politics, coming out strongly for Donald Trump in the 2024 presidential election, despite the former president’s long-standing denial of climate change — which has been Musk’s top priority.
Musk officially endorsed Trump on July 13, shortly after a failed assassination attempt on the Republican presidential nominee.
Musk agreed to donate $45 million a month to America PAC, a fund focused on Trump’s election, starting in July, the Wall Street Journal reported earlier this month.
Heading into Tuesday’s earnings call, Tesla shares were essentially flat for 2024.
Tesla shares fell 3.0 percent in after-hours trading.
Source: AFP