Tesla reports profit drop on price cuts, lower vehicle sales

• Published On: 24 July 2024 at 19:56

Tesla announced a significant decline in second-quarter profitability on Tuesday as a result of pricing cutbacks combined with aggressive spending on autonomous driving and other technology.

Elon Musk's electric vehicle company posted profits of $1.5 billion, down 45%, on revenues of $25.5 billion, up 2% due to an increase in its energy generating and storage sector.

Tesla's earnings per share fell short of analysts' estimates, but its revenues exceeded them.

The figures are the latest in a line of price drops across key markets as Musk's EV behemoth struggles with mounting competitive challenges.




Tesla fired off 10% of its global workforce this year, or approximately 14,000 employees, as part of a cost-cutting effort to fund big new investments.

According to Chief Financial Officer Vaibhav Taneja, the reorganisation resulted in one-time expenses of $622 million in the second quarter for severance and other costs.

While vehicle sales declined compared to the previous year, they increased from the first quarter as "overall consumer sentiment improved," Tesla claimed in its quarterly presentation.


Although Tesla confirmed its assumption that car volume growth will be "significantly lower" than last year, it also announced that new, more inexpensive models will enter production in the first half of 2025.

Musk disclosed the faster timeline in April, eliciting applause from Wall Street, which had been seeking new offers.

However, he declined to provide any information on Tuesday, stating that the matter would be addressed during a product launch event.

Tesla says its unconventional Cybertruck vehicle will remain profitable by the end of 2024 as manufacturing ramps up.

Robotaxi -

Tesla promised to continue its technological advancements in artificial intelligence and driverless driving.

This month, the business postponed a much-anticipated robotaxi event scheduled for August until October.


Because the "timing of robotaxi deployment depends on technological advancement and regulatory approval, we are working vigorously on this opportunity given the outsized potential value," according to Tesla.

Musk stated on a conference call that "moving it back a few months allowed us to improve the robotaxi as well as add a couple of other things for the product unveil," which is now scheduled for October 10.

Musk has a history of making big forecasts about the future of autonomous vehicles, claiming that traditional automobiles will be as useless as horse and buggy.

However, Musk has fallen short of expectations for self-driving technology, having earlier predicted that the business will accomplish the breakthrough by 2018.

Musk accepted his "overly optimistic" previous estimates, but stated that he expected the robotaxi to reach complete autonomy by the end of 2024, adding, "I would be shocked if we cannot do it next year."

- Political uncertainty.

The results come as Musk has recently extended his commitment to electoral politics, openly supporting Donald Trump in the 2024 presidential election despite the former president's persistent scepticism of climate change – a stated Musk priority.

Musk formally endorsed Trump on July 13, following a shocking murder attempt on the Republican presidential nominee.

According to the Wall Street Journal, Musk has pledged to pay $45 million each month to America PAC, a fund focused on electing Trump, beginning in July.

However, the Tesla CEO conceded that a Trump victory may disrupt a plan announced in March 2023 to build a new Gigafactory in Mexico, given that the Republican nominee has promised "heavy" tariffs on Mexican goods.

"I think we need to see just where things stand after the election," Musk told reporters.

Prior to Tuesday's earnings report, Tesla shares were practically flat for 2024.

CFRA analyst Garrett Nelson lowered Tesla to "hold" after previously advising investors to buy shares. While Nelson remains optimistic about Tesla's "long-term story," he highlighted a lack of "near-term catalysts" as a result of the robotaxi event's delay.

"We move to the sidelines on valuation and pending greater clarity on intermediate-term growth drivers," Nelson added, alluding to the recent share price rally.


Tesla shares slumped 7.8 percent in after-hours trading.