Tesla says it started building initial versions of an affordable car
Elon Musk's electric vehicle maker posted the worst quarterly sales decline in more than a decade and profit that missed Wall Street targets, but its profit margin on making cars was better than many feared. Tesla shares were down 2.6% in after-hours trading.
Tesla said it expects volume production of the long-promised cheaper vehicle in the second half of this year, raising hopes it will rekindle demand as it battles rising competition from cheaper EVs, especially in China, and a persistent backlash against Musk's far-right political views.
Tesla Chief Financial Officer Vaibhav Taneja said on a call with investors that production of the cheaper car would ramp up next quarter, slower than initially expected, and the company did not provide an update on its full-year deliveries forecast.
'Tesla's disappointing results aren't surprising given the rocky road it's traveled recently,' said Emarketer analyst Jacob Bourne. 'A truly affordable model will hit the bullseye in terms of boosting sales if Tesla can effectively position it right without detracting from its higher-priced models.'
The second straight quarterly revenue drop, with a 12% fall, comes despite rolling out a refreshed version of its best-selling Model Y SUV that investors had hoped would help revive demand.
A 51% dive in sales of automotive regulatory credits, which other automakers who have difficulty complying with government emissions rules buy from Tesla, also hurt revenue and profit.
Revenue fell to $22.5 billion for the April-June quarter from $25.50 billion a year earlier. Analysts on average were expecting revenue of $22.74 billion, according to data compiled by LSEG. Adjusted profit per share of 40 cents lagged the consensus of 43 cents per share.
The automotive gross margin, which excludes regulatory credits, was 14.96%, above Wall Street estimates, helped in part by lower cost per vehicle.
Tesla global deliveries dropped 13.5% in the second quarter, which was below Wall Street targets.
Tesla had said in April it would start producing the more affordable model by the end of the first half and sources had told Reuters the vehicle, a stripped-down version of its Model Y SUV, would be delayed by at least months. Tesla on Wednesday did not disclose any details on the model, how many units it had made, or how it would be priced.
The company said it continued to expect volume production of its custom-built robotaxi - called the Cybercab - and Semi truck in 2026.
Much of the company's trillion-dollar valuation hangs on its bet on its robotaxi service - a small trial of which was started in Austin, Texas, last month with about a dozen Model Y SUVs - and on its development of humanoid robots.
Investors are concerned about whether Musk will be able to devote enough time and attention to Tesla after he locked horns with President Donald Trump by forming a new political party this month. He had promised weeks earlier that he would cut back on government work and focus on his companies.
A series of high-profile executive exits, including a longtime Musk confidant who oversaw sales and manufacturing in North America and Europe, is also adding to the concerns. - Reuters
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