New York (AFP) – Tesla reported another drop in quarterly profits Wednesday on lower auto sales amid intensifying electric vehicle competition and lingering backlash over CEO Elon Musk’s involvement in US politics. Tesla reported second-quarter profits of $1.2 billion, down 16 percent from the year-ago level. The company in a press release emphasized ongoing efforts to lead in artificial intelligence and robotics. Revenues fell 12 percent to $22.5 billion. Lower profits had been expected after Tesla earlier this month disclosed a decline in auto deliveries. Results were also impacted by a fall in average vehicle selling prices and higher operating expenses driven by AI and other research and development projects.
Tesla did not offer an outlook on full-year vehicle production, citing shifting global trade and fiscal policies. “While we are making prudent investments that will set up both our vehicle and energy businesses for growth, the actual results will depend on a variety of factors, including the broader macroeconomic environment, the rate of acceleration of our autonomy efforts and production ramp at our factories,” Tesla said. The results come on the heels of Tesla’s launch last month of a robotaxi service in the Texas capital Austin, Musk’s first fully autonomous offering after pushing back the timeframe many times.
Musk has heavily touted Tesla’s autonomous driving program, as well as the company’s “Optimus” humanoid robot, which employs artificial intelligence technology. But analysts have criticized Tesla’s sluggishness in unveiling new autos, while questioning Musk’s commitment to an earlier goal of launching a state-of-the-art electric vehicle priced at around $25,000 to bolster the odds of mass deployment. In Wednesday’s press release, Tesla said “we continue to expand our vehicle offering, including first builds of a more affordable model in June, with volume production planned for the second half of 2025.”
Tesla has revamped its Model Y auto. That vehicle currently starts at $37,490, although the price will rise after a $7,500 federal tax credit goes away following passage of President Donald Trump’s massive tax and fiscal package earlier this month. The worsening near-term outlook for EV sales is one reason analysts at JPMorgan Chase call Tesla’s stock price “completely divorced from increasingly deteriorating fundamentals.” But analysts at Morgan Stanley rate the company a “top pick” in light of its leadership in robotics and artificial intelligence, although a recent note warned Musk’s political activity “may add further near-term pressure” to shares.
– Political controversies – Disagreements over Trump’s fiscal package has been a factor in Musk’s recurring feud with the president. The billionaire donated huge sums to Trump’s successful 2024 presidential campaign and then joined the administration to lead the “Department of Government Efficiency,” which cut thousands of government jobs, sparking boycotts and vandalism that tarnished the Tesla brand. After their bitter falling out, Musk warned Trump’s legislation would bankrupt the country. On July 5, the tech mogul announced he was launching a new political party in the United States, the “America Party.” Trump dismissed the launch as “ridiculous,” and has also threatened to look at deporting Musk and to revoking his government contracts. Shares of Tesla dipped 0.4 percent in after-hours trading.
© 2024 AFP
