Tesla’s shares plunged by 12% on Wednesday morning after the electric car manufacturer reported second-quarter earnings that fell short of expectations, reflecting ongoing challenges in its automotive sector.
On Tuesday, Elon Musk’s company revealed that its automotive revenue had declined by 7% year-on-year in the June quarter, amounting to $19.9 billion. Additionally, the company’s adjusted earnings margin experienced a drop.
Tesla has been compelled to reduce prices globally and offer discounts and incentives due to slowing sales and increasing competition, particularly in China, one of its key markets.
Year-to-date, Tesla’s stock is down nearly 1%, while the S&P 500 has surged by more than 16%.
Despite being the leading seller of electric vehicles in the U.S., Tesla is losing market share to an increasing number of competitors, partly due to its aging lineup of sedans and SUVs, as well as the controversial and political statements made by Musk.
There is ongoing debate among investors about Tesla’s future, with some concerned about the pressures on its core car business, while others remain optimistic about Musk’s vision for autonomous driving, artificial intelligence, and robotaxis.
Investors are particularly interested in when Tesla will introduce a new mass-market vehicle to rejuvenate its lineup. During the earnings call on Tuesday, Musk stated that Tesla is on track to deliver a new “affordable” car in the first half of next year.
The call also heavily focused on robotaxis. Musk described a future where Tesla owners could allow their vehicles to be used in an Uber-like ride-hailing service, with the cars driving autonomously.
When asked about the timeline for the first robotaxi ride, Musk responded, “I would be shocked if we cannot do it next year.”
However, Musk has a history of setting ambitious timelines and not meeting them. On Tuesday, he postponed the company’s robotaxi event to October, after initially promising it would take place in August.
“This is because I wanted to make some important changes that I think would improve the vehicle,” Musk explained, adding that Tesla plans to “show a couple of other things” at the event, without specifying further details.
