FREMONT, California – Tesla, the world’s largest electric-vehicle maker, saw its shares plummet by 10% on Wednesday. This drop came after the company reported a 45% decrease in net income for the second quarter, falling short of analysts’ expectations. The decrease in profits was attributed to slower sales, increased costs from employee layoffs, and significant investments in its artificial intelligence infrastructure.
Despite Elon Musk, Tesla’s CEO, postponing the unveiling of Tesla’s first “robotaxis,” the company remains optimistic about the future. Musk believes that turning all Tesla vehicles into a “giant autonomous fleet” could potentially increase the company’s valuation to $5 trillion. However, Tesla’s shares fell to $222 in early trading in response to the disappointing earnings report.
While Tesla’s revenues slightly exceeded expectations, reaching $25.5 billion, the company relied heavily on regulatory credits related to emissions requirements and significant growth in its energy storage business. The company’s operating expenses surged during the quarter, leading to a decline in its gross margin to 18%.
Musk has prioritized the development of an autonomous taxi service and an autonomous humanoid robot named Optimus. These projects have taken precedence over the production of an affordable EV, known as the Model 2, priced at $25,000. Tesla has faced several challenges in 2024, including a decrease in EV deliveries in the second quarter.
Despite the setbacks, Musk’s ambitious vision for Tesla’s future remains unwavering. The company has faced criticism and controversy, including Musk’s support for former President Donald Trump in the US election and ongoing disagreements with California officials. As Tesla continues to navigate challenges and opportunities in the market, the company’s trajectory remains a focal point of interest and speculation in the industry.