Tesla, profits and margins falling in anticipation of robotaxis. Share price -12%.

Tesla's group revenues saw a surprise increase in the April-June period compared to the first quarter. The company posted total revenues of $25.50 billion for the three months ended June, up from $24.93 billion a year earlier (+2%). Analysts had estimated an average of 24.77 billion, according to LSEG data. Revenue help came from emission credits (890 million in the second quarter) and record growth in the energy storage business. Meagre consolation. In fact, Tesla recorded its lowest profitability in five years and a real slump in net income. And this despite price cuts to boost demand and increased investment in artificial intelligence projects, the fruits of which may not be forthcoming. In addition, operating expenses increased by 39% to almost 3 billion, as a consequence of the 10% cut in the workforce of 14 thousand employees. The share price plunged, closing with -12.33%, at USD 215. Although the benefit of the last three months' rally (+33%) has not yet been burnt.

"Until Tesla is able to start production of new low-cost models, which the company expects in the first half of 2025, we believe pricing and incentives may remain a key demand lever and weigh on margins," Goldman Sachs analysts said.

Revenues from the automotive division alone (the other two are energy and services) decreased by 7% compared to a year earlier (19.8 billion versus 21.2 billion; it had been 17.3 billion in the first three months of 2024). Net profit was USD 1.48 billion, down 45% from USD 2.70 billion a year ago and far from market estimates (USD 1.91 billion). Adjusted earnings of 52 cents per share missed the Wall Street consensus of 62 cents. And profitability remains in clear distress. Gross margin stood at 18%, down slightly but far from the 29.1% in the first quarter of 2022. Adjusted EBITDA margin stopped at 14.4%, down from 15.9% in Q1 2023 and 18.7% in Q2 2023. The operating margin dropped to 6.3% (5.5% in the previous quarter) versus 9.6% twelve months earlier. On the other hand, deliveries in the second quarter fell for the second consecutive quarter, year-on-year, for the first time. Tesla is losing market share in China and in Europe. In the US, it fell below 50 per cent for the first time in the second quarter. In January, CEO Elon Musk had stated that he expected 'significantly lower' growth in deliveries during 2024. This outlook is also confirmed after these results.

"In the second quarter," commented the Austin, Texas-based company, "we achieved record quarterly revenues despite a difficult operating environment. The Energy Storage business continues to grow rapidly, setting a record in Q2 with 9.4 GWh of deployments, resulting in record revenue and gross profit for the entire segment. We also saw a sequential recovery in vehicle deliveries in Q2 as consumer sentiment improved and we launched attractive financing options to offset the impact of high interest rates."

The still widely-capitalised company is pushing hard to accelerate the development of its autonomous driving technologies and robotaxis, investing billions to train artificial intelligence models, but has postponed the official unveiling of Cybercabs from the announced 8 August date to 10 October. "Although the timing of robotaxi development depends on technological advances and regulatory approval, we are working vigorously on this opportunity given the enormous potential value." Tesla also stated that the much-discussed Cybertruck pick-up is on track to become profitable by the end of the year, while plans for a more affordable vehicle (the Model 2) are progressing, with production scheduled to begin in the first half of 2025.