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| In an aerial view, brand new Tesla cars sit parked at a Tesla dealership in Corte Madera, California. Justin Sullivan/Getty Images |
New York, CNN — Tesla's second-quarter profit fell over 40% compared to a year ago, due to increased competition from established automakers and a slowdown in the overall growth of EV sales.
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This significant drop marks a stark contrast for a company that had previously thrived on surging sales and profitability, becoming the world's most valuable automaker.
Tesla, a trailblazer in the EV market, now faces heightened competition from both domestic and international rivals. As the EV market matures, consumer interest growth has slowed.
Tesla's shares dropped about 12% on Wednesday morning, impacting the broader market. The stock had been down about 1% this year through Tuesday's close, after falling as much as 44% earlier this year.
The company reported an adjusted income of $1.8 billion for the quarter, or 52 cents per share, missing analysts' forecast of 61 cents per share, and significantly lower than the 91 cents per share earned a year earlier. Profit margins were sharply lower due to a series of price cuts on EVs.
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The period from April to June marked the second consecutive quarter of year-over-year sales declines, a first for Tesla. The only previous sales decline occurred early in the pandemic when factory closures were mandated by stay-at-home orders.
Tesla did not provide a new full-year sales target but warned that vehicle volume growth in 2024 might be notably lower than in 2023.
On an investor call, CEO Elon Musk downplayed the quality of competing EVs, considering them a short-term rather than a long-term issue for Tesla. He remains confident in the global shift toward fully electric transportation systems, including cars, planes, and ships.
Musk announced a delay in releasing details about fully automated robotaxis, moving the date from August to October. Despite calling the driver-assist feature "Full Self Driving," it still requires drivers to be ready to take control. Tesla faces regulatory and technical challenges before offering driverless robotaxis.
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Musk expressed optimism about achieving this by the end of the year, but noted his past predictions have been overly optimistic.
Tesla is under federal investigation for some of Musk's claims about Full Self Driving capabilities and has faced a Department of Justice inquiry, though the current status is unclear.
Additionally, plans to build an assembly plant in Mexico have been put on hold due to potential tariffs on Mexican-imported vehicles threatened by Republican nominee Donald Trump. Musk, a Trump supporter, has paused the project until after the presidential election.
This article has been updated with additional context and reporting.
