Tesla share price falls 8% in extended trade as Q2 profit misses estimates

Tesla share price fell 8% in extended trade after the electric vehicle (EV) maker’s net profit in the second quarter missed Wall Street estimates and reported its lowest profit margin in more than five years. Tesla shares declined 7.7% to $227.23 in after-hours trade.

Tesla’s Q2 net income declined to $1.48 billion from $2.70 billion a year ago amid price cuts to revive demand and increased spending on AI projects. The company’s adjusted earnings was at 52 cents per share, missing the Wall Street consensus of 62 cents, as calculated by LSEG, Reuters reported.

Tesla said profit was also weighed down by restructuring charges and an increase in operating expenses largely driven by artificial-intelligence (AI) projects. The company laid off more than 10% of its employees to cut costs.

The company reported Q2 revenue of $25.50 billion for the quarter, slightly ahead of last year and analyst targets.

Tesla’s Q2 automotive gross margin excluding regulatory credits was at 14.6% versus analysts’ estimates of 16.3%. The company’s sales of regulatory credits nearly tripled to a record $890 million in the second quarter from a year earlier. Traditional automakers buy credits from Tesla to meet clean-vehicle production regulatory targets.

Tesla said it expected a sequential increase in production in the third quarter.

In a conference call, Tesla CEO Elon Musk told investors that new competitors “have discounted their EVs very substantially, which has made it a bit more difficult for Tesla.”

Tesla delayed the unveiling of its Robotaxi product to October 10 from August 8 to make some important changes to the robotaxi. The company said “timing of Robotaxi deployment depends on technological advancement and regulatory approval.”

However, Musk said Tesla was likely to win regulatory approval for its “supervised” Full Self-Driving software, which requires driver attention, in China and Europe by the end of this year.

Tesla share price has eased 0.8% year-to-date (YTD), while the stock has rallied over 30% since June 13, when shareholders approved Musk's $56 billion pay package.

(With inputs from Reuters)