Tesla has reported a 45 percent decline in profit in the second quarter of 2024 as sales declined. The company reported revenues of $25.5 billion, slightly above last year’s $24.9 billion. Tesla’s net income declined to $1.48 billion in the second quarter, compared with $2.70 billion a year ago. Meanwhile, its sales of regulatory credits nearly tripled to a record high of $890 million in the second quarter from a year earlier.
The company reported its lowest profit margin in more than five years, missing Wall Street earnings targets in the second quarter as it cuts prices in an effort to raise demand while increasing spending on artificial intelligence (AI) projects.
Tesla recorded an automotive gross margin excluding regulatory credits of 14.6 percent in the second quarter. Meanwhile, its current operating profit margin was 6.3 percent, compared with 9.6 percent in the same period a year ago.
Lack of affordable models impacts demand
The company said it was on track to produce new vehicles including more affordable models in the first half of 2025. However, the models will result in achieving less cost reduction than previously expected. Shares fell 8 percent in after-hours trade on Tuesday following the data release.
In a bid to cut costs, Tesla laid off over 10 percent of its employees. However, profit was also weighed down by restructuring charges and an increase in operating expenses largely due to AI projects.
The company’s electric vehicle deliveries declined for two consecutive quarters as it faces rising competition and slow demand due to the lack of affordable models. Tesla’s sales of China-made EVs also declined in the second quarter from a year earlier as BYD and other Chinese automakers posted strong sales growth. Tesla said on Tuesday that it expects an increase in production during the third quarter.
Read: Tesla to have humanoid robots in low production for internal use next year: Musk
Robotaxi delays
Tesla shares have surged over 30 percent since June 13 when shareholders voted to approve Musk’s $56 billion pay package. Its shares got a boost by hopes for robotaxis. However, Musk recently said that Tesla has delayed the launch of the Robotaxi to October 10 from August 8 to make some important changes.
Musk has promoted Tesla as a technology company, most recently stating that self-driving technology was key. However, predictions of that technology maturing have been missed for years. However, on Tuesday, Musk forecasted that self-driving software would be able to drive Tesla vehicles without human supervision next year.
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