Tesla shares fell more than 8% in premarket trading on Wednesday after Elon Musk’s electric car maker reported a second consecutive quarterly loss, raising concerns that increased competition is hurting sales and profit margins.
The Austin, Texas-based company said on Tuesday that sales at its automotive division fell 7 percent in the three months ending in late June compared with the same period a year ago.
Tesla also reported its lowest profit margin in more than five years after sharply slashing prices in hopes of reviving sagging demand for electric vehicles.
“There were a number of competing vehicles on the market that didn’t sell well, but they were heavily discounted,” Musk said on a conference call with analysts.
The company’s closely watched gross profit margin — the percentage of sales after expenses — fell to 18% from 18.2% a year ago and peaked at 29.1% in the first quarter of 2022.
Tesla’s profit margins have fallen despite laying off 14% of its global workforce this year, or more than 19,000 people, and the company has also seen a wave of executive departures after Mr. Musk dismantled the team responsible for Tesla’s Supercharger division.
Musk’s company has been hampered by slowing sales globally and growing competition from Chinese electric vehicle makers such as Warren Buffett-backed BYD.
During a conference call late Tuesday, Musk said Tesla will unveil its long-awaited robotaxi in early October, two months later than originally planned. Musk said the extra time will allow the company to refine the robotaxi design and prepare other items to be announced at the event.
Musk also said Tesla plans to start production of a new affordable vehicle in early 2025. He had said this spring that a launch could come later this year.
Musk also noted that President Trump has promised to impose “heavy tariffs” on cars made in Mexico, and said Tesla would postpone a decision on whether to build a factory in Mexico until after the presidential election.
“If that’s the case, it doesn’t make sense to invest heavily in Mexico,” Musk said.
Tesla said on Tuesday its second-quarter net profit fell 45% from a year ago, to $1.48 billion in the April-June period, below the $2.7 billion it expects to earn in the same period in 2023.
Despite the disappointing results, Tesla bulls on Wall Street say they are playing the long game, predicting the stock price will soar once the company rolls out its robotaxi technology.
“I still believe they’ll get these things done,” said Gene Munster, managing partner at Deepwater Asset Management. He spoke to CNBC on Tuesday.
“They’re not going to deliver on time, but at the end of the day, no other car company is doing what Tesla is doing, and I think the stock price is going to continue to rise.”
Overall quarterly revenue rose 2% to $25.5 billion, beating Wall Street expectations of $24.54 billion, according to FactSet.
That comes from revenue from selling regulatory credits that help rivals meet emissions standards: Tesla sold $890 million worth of them in the quarter, triple the amount sold in the same period a year ago.
Excluding one-time items, Tesla earned 52 cents a share, below analysts’ expectations of 61 cents.
Tesla shares fell more than 40% earlier this year but have since recovered most of their losses.
Tesla said earlier this month that it sold 443,956 vehicles from April through June, down 4.8% from 466,140 in the same period last year.
Sales beat analysts’ expectations of 436,000 units but still signaled weak demand for the company’s aging product line.
Tesla sold about 831,000 vehicles worldwide in the first half of this year, far short of the more than 1.8 million that Musk predicted for the full year.
Tesla announced that it posted its best quarterly revenue ever “despite a challenging business environment.”
The company’s energy storage business generated sales of just over $3 billion, double the figure in the same period last year.
Munster said he was optimistic about the potential of Tesla’s self-driving software and its humanoid robot, Optimus.
“There are other companies with market caps of $3 trillion. I think Tesla is in that range,” he said.
“Today is not the day to dwell on these ugly margins, but I think we’re firmly on track with where the world is heading.”
With post wire
