Tesla Margins Fall for Fourth Straight Quarter on Price Cuts, Incentives | Economy

For the fourth quarter in a row, Tesla, the electric car maker led by Elon Musk, has missed Wall Street estimates for the second quarter of 2024, extending a tough start to the year marked by slowing sales and widespread layoffs across the company. Tesla reported adjusted profit of 52 cents a share on Tuesday, below analysts’ estimates of 60 cents. The company’s revenue rose to $25.5 billion in the three months ended June, nearly a billion more than the roughly $24.6 billion analysts had expected. It recorded 24.930 million in the same period last year.

Net profit was $1.48 billion in the April-June period, down from $2.7 billion in the previous year. Overall, net profit for the first half of the year fell 50% to $2.607 million (about €2.401 million), after $1.480 in the second, down 45% from the same period last year.

The company, led by Elon Musk, a former Democratic voter who last week pledged to give $45 million a month to Republican Donald Trump’s campaign, said it remains focused on cutting costs and forecasts “noticeably lower” growth rates in 2024 between “growth waves.” Shares of the electric-car maker fell nearly 4% on the New York Stock Exchange after the close of regular trading.

But second-quarter sales beat analysts’ expectations, sending the company’s stock soaring. While deliveries were lower than a year ago, Tesla consistently improved its numbers compared with the first three months of the year. The increase in purchases was due in part to a series of price cuts that have squeezed the company’s profitability. Automotive gross margins excluding regulatory credits, a metric closely watched by investors, reached 14.6% in the second quarter, up from 16.4% in the first quarter.

The electric vehicle maker has opted to offer customers cheaper financing options rather than significantly lower prices, which analysts say will add to the negative impact on profits in coming quarters. Deliveries in the second quarter also beat market expectations, helped by low-interest financing options, although they declined for the second quarter in a row.

Despite the accidents caused by the self-driving prototypes, investors have bought into Musk’s promises that robotaxis and fully autonomous humanoid robots are just around the corner, nearly reversing the stock’s slide this year. At one point in 2024, the stock had fallen more than 40% since the end of last year due to weak sales of Tesla vehicles. The company has invested billions of dollars in semiconductors to train artificial intelligence models, but has delayed the formal unveiling of robotaxis, a company source told Reuters.

The company expects to produce more vehicles in the short term than it did in the second quarter. Additionally, the new Cybertruck should be profitable by the end of the year, while plans for a cheaper vehicle (the models being sold aren’t quite affordable) are moving forward, with production expected to begin in the first half of 2025.

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