Tesla's Q2 Revenue Falls 12%... "Biggest Drop in a Decade" (Comprehensive)

Operating Profit Down 42%...
Operating Margin Rises from Previous Quarter
Stock Remains Firm in After-Hours Trading

Electric vehicle manufacturer Tesla reported results that fell short of market expectations for the second consecutive quarter.

According to Tesla's earnings report released on July 23 (local time), second-quarter revenue was $22.496 billion, down 12% from the same period last year. Bloomberg reported that this revenue decline is the largest for Tesla in at least a decade.

Earnings per share (EPS) came in at $0.40, a decrease of 23% compared to the same period last year. Both revenue and EPS missed Wall Street consensus estimates compiled by financial data provider LSEG, which were $22.74 billion in revenue and $0.43 in EPS. In the previous first quarter as well, Tesla's key results, including revenue and EPS, failed to meet market expectations.

Operating profit was $923 million, a 42% decrease from the same period last year. The operating margin was 4.1%, down 2.2 percentage points from 6.3% a year earlier, but up 2 percentage points from 2.1% in the previous quarter. Net profit was $1.172 billion, down 16% from the same period last year.

Revenue from Tesla's core automotive business was $16.661 billion, a 16% decline from the same period last year. Earlier this month, Tesla reported that its second-quarter vehicle deliveries totaled 384,122 units, a 13% decrease year-on-year.

In addition, second-quarter revenue from the energy generation and storage segment was $2.789 billion, down 7% from the same period last year.

Tesla cited several factors for the decline in profitability: a decrease in regulatory credit revenue received from governments, increased operating expenses due to artificial intelligence (AI) and other research and development (R&D) projects, and a drop in electric vehicle deliveries. However, Tesla highlighted one achievement in the second quarter, stating, "We continue to expand our automotive product lineup," and added, "Last month, we began production of a more affordable model for the first time and have established plans for mass production in the second half of this year." The company also continued development of the electric truck 'Semi' and the dedicated robotaxi vehicle 'Cybercab', noting, "Both are scheduled for mass production in 2026."

Furthermore, the company cited the launch of its robotaxi service as a major achievement, stating, "The second quarter of this year marked a major turning point in Tesla's history. As a company that has led the electric vehicle and renewable energy industries, this became the starting point for us to establish leadership in AI and robotics-related services as well." Tesla added, "While the robotaxi service is currently operating on a limited scale in its initial phase, our camera-only autonomous driving approach?trained on data collected from millions of vehicles worldwide?will continue to improve safety, rapidly expand the network, and enhance profitability."

On this day, Tesla's share price closed at $332.56 on the New York Stock Exchange, up 0.14% from the previous day, and traded at $333.90 in after-hours trading as of 5:30 p.m. Eastern Time, up 0.40%.