Musk hints at new affordable car and robotaxi plans as Tesla faces competition and falling margins
Tesla shares experienced their steepest drop since 2020 after the electric vehicle maker reported weaker-than-expected quarterly earnings and another decline in automotive revenue, according to CNBC.
The stock closed down 12 percent on Wednesday at $215.99 and is now down 13 percent for the year, while the Nasdaq is up 16 percent over the same period.
Tesla reported that auto revenue fell 7 percent from a year earlier to $19.9bn, and margins also decreased. Total revenue increased 2 percent to $25.5bn.
The company has been forced to cut prices globally and offer discounts and incentives due to slowing sales and rising competition, especially in China.
While Tesla remains the leading seller of electric vehicles in the US, it is losing market share to a growing number of rivals, partly due to its aging lineup of sedans and SUVs and the impact of Musk’s controversial and political statements.
Adjusted earnings for the second quarter were 52 cents per share, falling short of the average analyst estimate of 62 cents, according to LSEG. Tesla’s adjusted operating margin shrank to its lowest in three years, dropping to 14.4 percent from 18.7 percent a year earlier.
This marks the fourth consecutive quarter of margin decline.
Investors are also concerned about when Tesla will introduce a new mass-market car to revitalize its lineup. Musk stated on the earnings call Tuesday that Tesla is on track to deliver a new “affordable” car in the first half of next year.
Robotaxis were a significant topic during the earnings call. Musk envisions a future where Tesla owners can authorize their vehicles to be used in an Uber-style ride-hailing service, with the cars operating autonomously.
When asked about the timeline for the first robotaxi ride, Musk said, “I would be shocked if we cannot do it next year.”
Musk has a history of making ambitious promises without meeting the timelines. On Tuesday, he postponed the company’s robotaxi event to October, having previously scheduled it for August.
“This is because I wanted to make some important changes that I think would improve the vehicle,” Musk said, adding that Tesla plans to “show a couple of other things” without providing further details.
