Electric vehicle and clean energy giant Tesla has seen its profits fall by 45% in its latest quarterly results published today (24 July), leading to a 7.8% share price slump during after-hours trading.
The conglomerate and ‘magnificent seven’ constituent has now missed its earnings expectation for four quarters in a row, which CEO Elon Musk (pictured) said it is the result of weaker demand for its vehicles. While revenues increased by 2%, due to growth with its energy storage arm, net income came in at less than $1.5bn, compared to consensus forecasts of $1.9bn.
The company’s gross margins came in at 18%, while operating expenses increased by 39%, with Tesla upping capital expenditure on artificial intelligence, robotics and autonomous driving.
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As part of the results announcement, Musk said Tesla will begin to use humanoid robots – called Optimus – as early as next year, with views to roll the technology out to the wider market in 2026. However, Musk also announced he will delay the launch of his ‘robo taxis’, with the fleet’s unveiling having been pushed back from August to October.
Dan Coatsworth, investment analyst at AJ Bell, said: “Tesla’s financial performance is more erratic than a learner driver, having now missed earnings expectations for the fourth quarter in a row.
“The company always seems to be desperate to work on the next initiative rather than making sure the existing business is running smoothly. That raises the risk it is juggling too many things at once and not focusing on the bread and butter, instead preferring to look for another new toy to play with.”
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Coatsworth said while there is “a lot of talk” about robots and autonomous driving, this “doesn’t get over the fact that these are tomorrow’s potential riches, not today’s”.
“The stark reality is that Tesla’s profits have plummeted and that’s not what investors should expect from a business,” the investment analyst continued.
“Tesla needs to find a better way to thrive in a more difficult environment for electric vehicles now rather than later. It’s clear that the pace of adoption is slower than expected – people still have concerns about battery range and whether there are enough experts to fix vehicles when things go wrong.
“Competition is also increasing and Tesla’s first mover advantage is fading away.”
