Tesla’s earnings plunge again, Musk warns of turbulent quarters

Elon Musk’s Political Candidacy: Impact on Tesla Sales and Profits

Elon Musk’s foray into politics a year back has had lasting repercussions on his flagship electric vehicle brand, Tesla. In the most recent quarter, both consumer orders and overall earnings continued to stall decisively.

Recent Financial Highlights

• Quarterly Revenue: A notable decline from the previous fiscal period.
• Profit Margins: Reports show a steep erosion in profitability.
• Vehicle Delivery Numbers: Fewer units shipped than forecasted.

Underlying Factors

• Increased scrutiny from regulatory bodies.
• Shift in consumer sentiment post-election campaign.
• Operational challenges in production facilities.

Forward‑Looking Outlook

• Market analysts predict continued pressure on sales until Musk stabilizes his public image.
• Cost control measures are being deployed to safeguard margins.

Electric Vehicle Pioneer Faces Decline Amid Star-Related Controversies

For the third consecutive quarter, the electric‑vehicle manufacturer reported a drop in revenue and profits as consumers continue to stay away. Shareholders noted a 12% decline in sales and a 16% fall in net earnings, underscoring a growing consumer wariness linked to the CEO’s public image.

Profitability Metrics

• Net profit: €990 million ($1.17 billion), down from €1.19 billion ($1.4 billion) in the same period last year.
• Earnings per share: 33 ¢, a decrease from 40 ¢ in the previous year.
• Adjusted earnings per share: 40 ¢, consistent with analyst expectations.

Revenue Trends

• Total sales: €19.1 billion ($22.5 billion) in Q2 2024, a 12% shrinkage from €21.7 billion ($25.5 billion) in Q2 2023.
• The drop slightly outpaced forecast estimates, indicating a more pronounced market pullback.

Stakeholder Reaction

• Shares declined by more than 4.4% in after‑hours US trading on the news of the earnings shortfall.
• Analysts cited the CEO’s reputation as a “toxic brand”, tightly interwoven with the company’s public perception.

While the firm remains a key player in the electric‑vehicle landscape, the latest financial results highlight the mounting pressure from both market forces and brand sentiment.

Are robotaxis going to save Tesla’s earnings?

Shift Toward Robotaxi Vision at Tesla’s Latest Earnings Call

Focus Moves from Vehicle Sales to Autonomous Transportation

• Elon Musk keeps the conversation centered on robotaxi development, autonomous software, and robotics, claiming they represent the company’s future.
• The quarterly results made clear that these initiatives have not yet translated into robust earnings.
• Morgan analyst Seth Goldstein noted that the company’s priorities appear to pivot from “delivery growth” to expanding its robotaxi platform.

Market Challenges & Competitive Landscape

• Potential consumers across the U.S. and Europe remain cautious about purchasing Tesla vehicles.
• High-profile political associations have strained the brand’s image in key European markets such as the UK, France, and Germany.
• Chinese manufacturer BYD and German automaker Volkswagen have capitalised on this hesitation, gaining traction in the EV segment.

Robotaxi Rollout: Austin Leads the Charge

• June marked the start of a paid robotaxi service in Austin, Texas.
• Musk announced aspirations to deploy driverless cabs in multiple U.S. cities, with an objective of reaching “probably half of the U.S. population” by year‑end, contingent on regulatory clearance.
• Tests have generally proceeded smoothly, though a few incidents—such as a vehicle veering into an opposing lane—raise safety concerns.

Competition from Established Autonomous Taxi Providers

• Waymo, a pioneer in autonomous rides, already operates in several urban markets.
• It recently logged its tenth million paid trip, setting a high benchmark for Tesla’s future entrants.

Tesla CEO Elon Musk warns that rough quarters are coming

Federal Budget Cuts Affect Electric Vehicle Incentives

As Congress finalizes the new federal budget, significant changes threaten the automotive industry’s incentive structures. The legislation eliminates a credit that could discount an electric vehicle by up to $7,500 and removes penalties that would penalize manufacturers for exceeding carbon emission limits.

Impact on Tesla’s Credit Market

• In Q2, Tesla earned roughly $439 million from selling carbon credits—less than half of the $890 million recorded a year earlier.
• The removal of penalties could reduce demand from conventional car makers who normally purchase these credits to stay compliant.

Musk’s Outlook on the Transition

Elon Musk described the period as “a weird transition,” forecasting several challenging quarters ahead. He cautioned that, while incentives will wane, the company believes its future autonomous driving technology will reshape profitability.

Key Points:

• Autonomous technology scheduled for large-scale deployment in the latter half of next year.
• Anticipated “Full Self‑Driving” feature approval in parts of Europe by year’s end, though earlier hopes were set for March 2025.
• Slow‑priced new model introduction planned for the last quarter of the current year, following an earlier expected launch in June.

Looking Forward

In the face of declining incentives and a tightening regulatory environment, Tesla is pivoting toward affordability and advances in autonomy as primary drivers for sustaining growth.

Tesla robots

Musk Announces Ambitious Expansion for Tesla’s Humanoid Robots

Elon Musk has outlined an aggressive growth trajectory for Tesla’s robotic division, projecting production of the Optimus humanoid to reach 100,000 units per month within the next five years. He described a future in which robots will be so common that people will not consciously notice them.

Control and Ownership

• Musk indicated he desires a larger share in Tesla but prefers it not to be so substantial that it precludes the possibility of removal if he were to act irrationally.
• He stated his current 13% stake is sufficient to guide the company in the right direction while allowing for accountability.

Financial Highlights

The quarterly gross margin dropped from 18% to 17.2% compared with the same period a year earlier, reflecting a slight decline in earnings per dollar of revenue.

Notably, Tesla’s investment in Bitcoin yielded a profit, reporting a $284 million paper gain (approx. €241.5 million). This marked a turnaround from the loss recorded in the preceding quarter.

Key Takeaways

• Optimus production aims for 100,000 units monthly within five years.
• Musk seeks increased ownership but maintains a balance for corporate governance.
• Gross margin slipped to 17.2%.
• Bitcoin investment turned profitable, generating significant paper gains.