Tesla Stock Tumbles After Its Profit Plunged

Telsa second-quarter profit fell more than 40% from the previous year as the electric car business faced more EV competition from established automakers and a slowing in global EV sales growth.

The decline in income is a dramatic contrast to a corporation that developed to become the world’s most valuable automobile based on rising sales and profitability.

The findings highlight how Tesla, a pioneer in introducing electric vehicles to American drivers, is now facing more domestic and international competition. And as the EV market matures, customer interest in EVs has declined.

Tesla | Auto Guide

Tesla Stock Tumbles After Its Profit Plunged

Tesla (TSLA) shares plunged almost 12% on Wednesday morning, pushing down the broader market. Tesla’s stock was down roughly 1% this year through Tuesday’s close after plunging as much as 44% earlier in the year.

Tesla announced adjusted earnings of $1.8 billion in the quarter or 52 cents per share. Analysts expected 61 cents per share earnings, down from 91 cents the previous year. Its crucial profit margin fell substantially as a series of EV price cuts took its toll.

From April to June, the company had its second consecutive quarter of year-over-year sales decreases and its first consecutive quarter of dropping sales volume. Tesla’s only previous quarterly sales decline since going public occurred early in the pandemic when stay-at-home orders caused its plants to close.

Tesla did not provide a new sales target for the full year. However, it stated: “In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023.”

On the investor’s call following the announcement, Tesla CEO Elon Musk criticized the quality of EVs produced by other manufacturers, claiming that it was simply a short-term issue for Tesla and not a long-term one. He added that Tesla is still persuaded that the world is going towards fully electric transportation systems, not just for automobiles, planes, and ships.

Musk also stated that the business would provide more information on fully automated robotaxis in October rather than August as initially intended. The business calls its driver assistance feature “Full Self Driving,” but drivers must still be prepared to take control of the vehicle. According to the company’s earnings statement, Tesla still confronts regulatory and technical challenges before offering self-driving cars.

Musk stated that he still believes it is possible to reach by the end of this year and certainly by next year, but cautioned: “My predictions on this have been overly optimistic in the past.”

Tesla | Top Gear Image

Tesla Stock Tumbles After Its Profit Plunged

The company faces government probes into several of Musk’s boasts about Full Self-Driving capabilities. The company has also been the subject of a Department of Justice investigation, though it is unclear what the current situation is.

However, he disclosed that Tesla’s plans to build an assembly factory in Mexico had been placed on hold. The plans were disclosed more than a year ago, but Musk said they have been halted until after the presidential election due to Republican contender Donald Trump’s vow to impose taxes on Mexican-imported vehicles. Musk is a big Trump booster, having endorsed him and reportedly pledged tens of millions of dollars to the former president’s re-election campaign. Trump promised comparable duties on Mexican-made autos in 2019 but has yet to follow through.

SOURCE – CNN