Tesla reported a significant drop in its second-quarter profits, recording its lowest profit margin in more than five years. The company's net income fell to $1.48 billion, a stark contrast to $2.70 billion a year ago. Adjusted earnings per share were 52 cents, missing the Wall Street consensus of 62 cents. This decline is largely attributed to aggressive price cuts and incentives implemented to stimulate demand, as well as increased investments in AI projects.
Automotive gross margin, excluding regulatory credits, was 14.6% for the quarter, falling short of analyst estimates of 16.29%. The company's revenue also saw a 12% decline, dropping to $22.5 billion from $25.5 billion in the same period last year, marking the steepest quarterly revenue fall in over a decade. This revenue figure, however, was slightly above analysts' expectations of $22.74 billion.
CEO Elon Musk acknowledged that increased competition, with other new EV makers offering substantial discounts, has made it challenging for Tesla. Analysts noted that Tesla has now missed earnings targets for four consecutive quarters. The company also reported that it had begun limited production of a new, more affordable vehicle in June, a project that had previously faced delays. However, the Cybertruck pickup model saw a significant sales decline, with 4,300 units sold in the second quarter, representing a 50% drop from the previous year.
