Tesla on Tuesday reported a significant drop in profit in the three-month period between April and June, a result of the electric car company’s sluggish sales.
The automaker said it earned $1.5 billion in the year’s second quarter on revenue of $25.5 billion. In the second quarter of 2023, Tesla earned $2.7 billion and had revenue of $24.9 billion.
The company’s current operating profit margin, a measure of how much money it makes on each dollar of revenue, was 6.3 percent, compared with 9.6 percent in the same period a year ago.
The results are likely to increase pressure on Tesla and its CEO, Elon Musk, to show the company can find new ways to grow and make money.
Tesla shares have jumped 40 percent since the end of May, largely because investors are betting that Mr. Musk will successfully transform Tesla into an artificial intelligence company that runs a driverless taxi service and sells robots that can efficiently perform manufacturing and other tasks .
“As we continue to innovate to reduce manufacturing and operating costs, we expect over time that our hardware-related gains will be accompanied by an acceleration of AI, software and fleet-based gains,” Tesla said in a statement.
The company’s results were helped by an increase in sales of regulatory credits to other automakers that need them to meet emissions standards. Tesla took in $890 million from selling such credits in the second quarter, up from $282 million a year earlier.
Another growth area for the company has been the sale of batteries, which are mainly used by energy companies to store and discharge electricity on the power grids. Sales of these systems doubled in the quarter, to $3 billion, from a year earlier.
Even taking those gains into account, the company’s second-quarter earnings were lower than Wall Street analysts had expected, and Tesla’s stock fell about 3 percent in extended trading Tuesday after its earnings report.
It’s unclear whether the company’s new taxi and robot businesses will take off quickly enough to make up for Tesla’s weakened car sales. Several companies, including Google’s parent company Alphabet, have been developing driverless taxis for years but only offer rides in a few cities.
Sales of Tesla’s electric cars fell by 4.8 percent in the second quarter, to 444,000 vehicles from the same period a year earlier. Production during the period decreased by 14 percent to approximately 411,000 cars.
The second-quarter setback comes after Tesla reported a 55 percent drop in profit and a 9 percent drop in revenue in the first three months of 2024.
The company is facing increasing competition from other manufacturers, who have increased production of electric models. Tesla’s share of electric vehicle sales in the US fell in the second quarter to below 50 percent for the first time, according to Cox Automotive, a research firm.
From April to June, Tesla accounted for 49.7 percent of electric car sales in the United States, down from 59.3 percent a year earlier, Cox said. Ford Motor said this month it sold nearly 24,000 electric cars in the second quarter, far fewer than Tesla but up 61 percent from a year ago. General Motors sales of battery-powered models increased by 40 percent, to nearly 22,000 vehicles.
Separately, GM said Tuesday it earned $2.9 billion in the second quarter, up 14 percent from a year ago. Its operating profit margin, at 9.3 percent, surpassed Tesla’s, a rare feat for GM
Tesla’s decline in sales appears to be at least partially the result of Musk’s right-wing politics. Tesla’s early customers and fans were many environmentalists and left-leaning consumers, many of them California residents. Registrations of new Teslas in the state fell 24 percent in the second quarter, according to data released last week by the California New Car Dealers Association.
With its sales slump, Tesla has tried to cut costs. In April, Musk said the company would lay off more than 10 percent of its workforce, or about 14,000 people, worldwide. The cuts include 2,000 workers at its factory in Fremont, California, and nearly 2,700 at another in Austin, Texas.
It has also lowered the prices of its cars, which has reduced the profit on each vehicle it sells. For a time, those cuts helped lift sales, but now the company is struggling to win customers even with lower prices.
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