DETROIT, Michigan
Tesla reported a 45 percent drop in second-quarter net income compared to the previous year, as global sales of its electric vehicles declined despite price cuts and low-interest financing.
The Austin, Texas-based company announced that it earned $1.48 billion from April through June, down from $2.7 billion in the same period of 2023. This marks Tesla’s second consecutive quarterly decline in net income.
According to FactSet, revenue for the second quarter increased by two percent to $25.5 billion, exceeding Wall Street expectations of $24.54 billion. However, Tesla earned 52 cents per share, excluding one-time items, falling short of analyst predictions of 61 cents.
Tesla shares dropped about eight percent in after-hours trading following the announcement. Although the stock had fallen by more than 40 percent earlier in the year, it has since recovered most of those losses.
Earlier this month, Tesla reported selling 443,956 vehicles from April through June, a 4.8 percent decrease from 466,140 vehicles sold in the same period last year. While the sales numbers surpassed analyst expectations of 436,000 vehicles, they still indicated weakening demand for Tesla’s aging product lineup.
For the first half of 2024, Tesla sold around 831,000 vehicles globally, significantly short of CEO Elon Musk’s target of over 1.8 million for the full year.
The company’s gross profit margin, the percentage of revenue retained after expenses, fell to 18 percent, down from 18.2 percent a year ago and 29.1 percent in the first quarter of 2022.
Despite the challenging market, Tesla reported record quarterly revenue, driven in part by its energy-storage business, which generated over $3 billion, double the amount from the same period last year.
CEO Elon Musk has promoted Tesla as a leader in autonomous vehicles, robotics, and artificial intelligence. He stated that the company’s “Full Self Driving” system should operate without human supervision by the end of the year, though he acknowledged previous overly optimistic predictions.
Tesla also announced a delay in unveiling its robotaxi until October 10 to make improvements. Additionally, Musk expects limited production of the Optimus humanoid robot to begin early next year, with broader distribution planned for 2026.
Morningstar analyst Seth Goldstein attributed the large stock drop to Tesla giving little new specific information on vehicles or tangible financial targets. “Maybe some investors are saying, ‘you know, we didn’t get more details from management,'” Goldstein said.
Although the next scheduled catalyst that could move the stock is now the robotaxi event in October, Goldstein said Musk could share details of new products on X, his social media platform. “Elon Musk could share details of Tesla’s progress,” he said. “That could be a catalyst for the stock on any given day.”
The company also reported $890 million in revenue from regulatory credits sold to other automakers, doubling the typical amount from previous quarters. Tesla faced $622 million in restructuring and other expenses, including layoffs of over 10 percent of its workforce.
Tesla cautioned investors that sales growth might be significantly lower than the growth rate achieved in 2023, citing a period between two major growth waves, with the next expected from advancements in autonomous vehicles and new models.
