Tesla reported a more than 40% drop in profit in the second quarter compared to a year ago, attributing the decline to increased competition in the electric vehicle (EV) market and a slowdown in overall EV sales growth. This marks a significant shift for the company, which had previously experienced surging sales and profitability, propelling it to become the world's most valuable automaker.
The results highlight the intensifying competition that Tesla is facing from both domestic and international rivals as the EV market matures. Despite reporting adjusted income of $1.8 billion in the quarter, or 52 cents a share, the company fell short of analysts' expectations of 61 cents a share, down from 91 cents a share in the previous year. Tesla's profit margin also took a hit due to a series of price cuts on its EVs.
This quarter marked the second consecutive quarter of year-over-year sales declines for Tesla, a first in its history of declining sales volume. The company did not provide a new sales target for the full year but cautioned that its vehicle volume growth rate in 2024 may be notably lower than in 2023.
CEO Elon Musk expressed confidence in Tesla's long-term prospects, dismissing the competition from other automakers as a short-term issue. He reiterated the company's commitment to advancing fully electric transportation systems, including planes and ships, in addition to cars.
Musk announced that details on fully-automated robotaxis, initially planned for August, would now be released in October. Despite labeling its driver assist feature as 'Full Self Driving,' Tesla still faces regulatory and technical challenges before offering driverless robotaxis.
Tesla is under federal investigation regarding Musk's claims about Full Self Driving capabilities, with previous Department of Justice inquiries. Musk revealed that plans to build an assembly plant in Mexico have been paused until after the presidential election due to potential tariffs on Mexican-imported vehicles.
Following the earnings report, Tesla's shares dropped over 8% in after-hours trading, contributing to a 1% decline in share value for the year, after a previous 44% decrease earlier in the year.
