Tesla’sTSLA

rocky road continues. The electric vehicle pioneer reported its fourth straight earnings miss due to slowing sales and aggressive cost-cutting efforts. In Q2, Tesla posted adjusted earnings of 52 cents per share, missing the average analyst estimate of 62 cents. Although total revenue exceeded expectations, rising 2% from $24.9B to $25.5B, automotive sales fell by 7%.

Navigating rough terrain: It’s the second consecutive quarter of declining profits, which dropped 45% to $1.5B. Automotive gross margin, excluding regulatory credits, fell from 16.4% in Q1 to 14.6% in Q2. Tesla reiterated its cautious outlook for 2024, projecting “notably lower” volume growth — focusing on cutting costs while banking on advances in autonomy and new product launches to drive future growth.

• Tesla’s stock, down ~1% this year at yesterday’s close, fell as much as 7% in after-hours trading following the earnings report.
• Earlier in 2024, shares had plummeted over 40% from the end of the previous year due to weaker vehicle sales — before investors bought into CEO Elon Musk’s promises of fully autonomous robotaxis and humanoid robots just around the corner. 

Robotaxis and Robots: The Future of Tesla?

Tesla kept details about its self-driving robotaxi, the CyberCab, under wraps. The company has postponed the unveiling by at least two months as Musk ordered redesigns. Tesla highlighted that the robotaxi would use a new “unboxed” manufacturing method, similar to modular assembly with Lego-like components, rather than a traditional production line. 

• “Though timing of robotaxi deployment depends on technological advancement and regulatory approval, we are working vigorously on this opportunity given the outsized potential value,” Tesla stated.
• Musk said Tesla plans to use humanoid robots internally before making them available to other companies in 2026. He believes these robots will be “genuinely useful” in improving car production efficiency, handling complex tasks, and alleviating labor shortages.

Forward-looking: The company expects to produce more cars this quarter than in Q2. Tesla also reported that its Cybertruck is on track to become profitable by year-end, and production of a lower-cost vehicle is set to begin in the first half of 2025. As Gene Munster, managing partner at Deepwater Asset Management, told Bloomberg: “The whole story here is about what else is to come.” And investors will learn what’s to come on Oct. 10, when Tesla debuts its robotaxi.