Tesla profit margins worst in five years as price cuts, incentives weigh
electric vehicle maker cut prices to revive demand while it increased spending on AI projects.
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The company said it was on track to produce new vehicles, including more affordable models, in the first half of 2025, although the models will result in achieving less cost reduction than previously expected. Shares fell 8% in after-hours trade.
«Perhaps more than ever in the company's recent history, Tesla's investors need results; those will have to come fast — both for the humanoid robot and for the Robotaxi,» said Thomas Monteiro, senior analyst at Investing.com.
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The second quarter was tumultuous, with CEO Elon Musk shelving development of an all-new cheaper car in favor of less ambitious lower-cost models and working on creating self-driving taxis, helping to boost shares.
The company also laid off more than 10% of its employees to cut costs, and Tesla said profit was also weighed down by restructuring charges and an increase in operating expenses largely driven by artificial-intelligence projects.
Tesla recorded automotive gross margin excluding regulatory credits of 14.6% in the second quarter, compared with estimates of 16.29%, according to 20 analysts polled by Visible Alpha.
Dan Coatsworth, investment analyst at AJ Bell, said Tesla has now missed earnings targets
