Tesla Inc. reported another quarter of disappointing profit and postponed a highly anticipated unveiling of autonomous taxis, sending the carmaker’s volatile stock plunging in early trading.
Adjusted earnings fell to 52 cents per share in the three months ended in June, missing estimates for the fourth consecutive quarter. Chief Executive Officer Elon Musk confirmed the company will push back an event showcasing robotaxi prototypes by about two months, to October, confirming an earlier Bloomberg News report.
Tesla shares traded down 7% as of 4:50 a.m. Wednesday in New York. The stock had surged since the company last reported earnings, fully recovering from a more than 40% decline for the year.
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 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 US 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 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.
Tesla’s automotive gross margin, excluding regulatory credits — a closely watched metric — fell to 14.6% in the second quarter, from 16.4% in the first three months of the year. That drop reflects falling vehicle sales and pricing, rising expenditures on AI and other projects, and restructuring charges from sweeping job cuts.
Musk said Tesla will manufacture new, lower-cost cars at its plant in Austin 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 US 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 that President Joe Biden championed, it would be devastating for competitors but may actually help Tesla in the long term.
“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.”
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