Tesla earnings updates: EV maker misses Wall Street's estimates as revenue drops 12%
Tesla's latest launch was actually a … diner?
Two Business Insider reporters visited the new Tesla Diner in Los Angeles within 24 hours of its grand opening this week. The retro-futuristic atmosphere is complete with rounded architecture, eye-catching neon lighting, 45-foot drive-in screens playing Sci-Fi classics like "Star Trek" and "War of the Worlds," and servers darting around on roller skates.
Celebrity chef Eric Greenspan controls the 24-hour diner's menu offerings, which are reimagined takes on classics including burgers, hot dogs, breakfast tacos, and chicken and waffles. Opening day was bustling and busy, with the kitchen at times overwhelmed by wave upon wave of guests — typical for a grand opening — but minor hiccups in service were easily overcome and both reporters left feeling the diner was worth a second visit.
While it remains to be seen how long the novelty of the Tesla Diner will linger at the West Hollywood location, Musk has said this is just the first of many souped-up Supercharger stations to come, announcing on Monday that he's planning to build a second drive-in near SpaceX's Starbase spaceport in Texas.
Analysts and investors want key data points for Tesla's Robotaxis
As Tesla continues its pilot launch of the robotaxi service in Austin, investors and analysts will be paying attention to a few key data points.
Gene Munster, managing partner at Deepwater Asset Management and Tesla investor, said in an analysis published Tuesday that the rate of the Robotaxi's expansion will be more important than the "absolute fleet size of geofence size."
Investors appear to agree, as one of the top questions on Tesla's online Q&A forum asks about the rate the company expects to increase operations.
Jose Asumendi, JP Morgan's head of the European Automotive Research team, told Business Insider that Robotaxi's long-term progression will be determined by the number of cities the service has been deployed, number of accidents and disengagements per kilometer, and the technology's acceptance by the public.
- Lloyd Lee
The robotaxi launch will likely be a hot topic
Tesla launched its highly anticipated robotaxi service at the end of June in Austin. The autonomous ride-hailing service is still in its early stages, and only a select group of people have the opportunity to try the service.
Currently, the service operates with a limited number of self-driving Model Ys and a safety operator in every ride.
In its last earnings call, Tesla said it would scale up the service "rapidly" after the launch. Investors will likely be listening for an update on future plans to expand the service. Musk said the plan was to be in many cities by the end of the year and predicted there would be "millions of Teslas operating fully autonomously in the second half of next year."
William Blair: Eyeing headwinds from Trump's Big Beautiful Bill
Tesla could see further downside, partly thanks to policy changes in the Republican tax and spending bill, analysts from William Blair wrote in a note this month.
The firm pointed to the bill's ending of the EV tax credit, as well as the removal of corporate average fuel economy fines — fines for carmakers when their vehicles aren't energy efficient enough. Both changes are expected to impact Tesla's revenue, given that the company sold emissions credits to other carmakers that didn't meet energy efficiency standards.
The firm downgraded Tesla to a rating of "Market Perform."
Sales speed bump
The road ahead looks even bumpier for Tesla.
Analysts have warned that the company could face a major hit to its profits from the impact of Trump's One Big Beautiful Bill, which is set to eliminate the $7,500 tax credit for new US-made EVs.
Ahead of the tax credit coming to an end on September 30, Tesla is piling on incentives and offers.
A banner at the top of Tesla's US website urges customers to "take delivery now" ahead of the deadline, and the EV giant is offering 18 months of free supercharging and 0% financing on select models. Tesla is also allowing owners of its Full Self-Driving system to transfer the software to a new vehicle for free for a limited time.
Like many of its rivals, Tesla is attempting to boost sales of its EVs before the $7,500 discount goes away.
Analyst Gene Munster wrote in a Tuesday note that he expects the policy change to impact around 20% of Tesla's global deliveries, adding that he expects the company's sales to be better than expected next quarter as buyers rush to take advantage of the tax credit before it vanishes for good.
Wedbush Securities: Stock could be at a 'positive crossroads"
Tesla stock could be heading toward an inflection point, if Musk continues to lead Tesla full-time and stay on top of its most important projects, analysts at Wedbush Securities said.
In a note on Tuesday, the firm said that the outlook for Tesla looked "dramatically different" now compared to three months ago, when Musk was still working closely with the Trump administration.
In a previous note, Wedbush analysts expressed concerns over Musk's political intentions, calling his plan to create a new political party a "Soap Opera" that needed to end. The firm also outlined a list of actions Tesla's board needed to take to move the company forward, which included drafting a new pay package for Musk and setting guidelines for Musk's political plans.
"We are at a 'positive crossroads' in the Tesla story," the analysts said.
Wedbush reiterated its "Outperform" rating and the stock and $500 price target, implying about 49% upside from current levels.
Investors push for new models
Even as Tesla has finally launched its robotaxi service in Austin, sales of its regular electric cars have been lacklustre.
Tesla deliveries fell 13.5% in the last quarter compared to the previous year, with the automaker seeing a similar fall in Q1.
Tesla's stock is also down over 18% so far this year amid customer blowback over Musk's politics and growing competition from Chinese EV companies like BYD and Xpeng.
The automaker said it would begin production of new, more affordable models in the first half of 2025 to help grow sales, but that deadline came and went with no acknowledgment from Tesla.
Shareholders are keen to get answers about the new models in Tesla's Q2 analysts call. A forum for retailer investors to submit questions for the call with Musk and other executives includes several submissions asking for more details about the mysterious affordable EVs.
"Can you provide an update on the development and production timeline for Tesla's more affordable models? How will these models balance cost reduction with profitability, and what impact do you expect on demand in the current economic climate?" wrote one shareholder in a post that received nearly 3,000 votes on the platform.
Bank of America: Q2 earnings are challenged
Tesla is in a difficult spot ahead of earnings, Federico Merendi, an analyst at Bank of America, wrote on Monday.
"Tesla 2Q earnings are likely to be challenged due to tariffs and disappointing deliveries," Merendi wrote, adding that Tesla sourced its batteries from China and that its exposure to tariffs was "not insignificant."
The bank reiterated its "Neutral" rating on the stock and raised its price target to $341 a share, up from the prior estimate of $305. Its new price target implies about 3% upside from the current levels.
A rocky year
It's never boring at Tesla, and this year has been no exception.
The EV giant has battled backlash over CEO Elon Musk's forays into politics and faced investor discontent over the amount of time the billionaire is spending on other projects.
Shareholders and analysts have been somewhat mollified by Musk's return to Tesla, with the world's richest man saying he's back "working 7 days a week at Tesla and sleeping in the office."
"Now investors are seeing more of a 'wartime CEO' as Elon is laser-focused on the Robotaxi expansion in Austin with more cities soon on the docket for this key autonomous initiative," wrote Wedbush Securities analyst and Tesla bull Dan Ives in a note on Monday.
Ives, who was previously told to "shut up" by Musk after calling for Tesla's board to exercise more oversight over their CEO's political activities, said that he expected sales to rebound as demand for Tesla's refreshed Model Y grows, especially in China.
He also flagged the broadly successful robotaxi launch and the upcoming shareholder vote on a possible investment in Musk's artificial intelligence startup xAI as evidence that Tesla is getting its groove back.
Morgan Stanley: Elon Musk's politics could be a headwind
Musk's promise to create a new political party could be a short-term headwind for Tesla stock, analysts at Morgan Stanley wrote in a note, calling the situation a "party crasher."
The bank pointed to the immediate drop in Tesla stock after Musk officially announced his plan to form the " America Party" in a post on X earlier this month, which sent shares tumbling around 7%.
"While the situation remains fluid, we believe investors should be prepared for further devotion of resources (financial, time/attention) in the direction of Mr. Musk's political priorities which may add further near-term pressure to TSLA shares," analysts wrote.
Still, Tesla stock remains a "top pick" for the bank. Analysts reiterated their $410 price target on the stock, pointing to their growth forecasts for Tesla's auto business.
Tesla earnings expectations: Analysts estimate $22.6 billion of revenue for the 2nd quarter
Second quarter
Adjusted EPS estimate: 42c
EPS estimate: 32c
Revenue estimate: $22.64 billion
Gross margin estimate: 16.5%
Operating income estimate: $1.23 billion
Free cash flow estimate: $760 million
Capital expenditure estimate: $2.43 billion
Full year
Production estimate: 1.65 million
Deliveries estimate: 1.65 million
Capital expenditure estimate: $10.14 billion
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