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Tesla profits slide 16%, despite Elon Musk's pivot back to his companies
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A 2023 Model X sports-utility vehicle sits outside a Tesla dealership Sunday, June 18, 2023, in Englewood, Colo.
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Tesla on Wednesday reported a drop in its profit during the second quarter, as the electric vehicle maker continues to struggle despite CEO Elon Musk's pivot back to focusing on his companies after his controversial role leading the Trump administration's government cost cutting efforts.
The company's electric vehicle sales have been flagging, and earlier this month it reported a drop of 13.5% in the quarter, compared with the same period a year ago. On Wednesday, Tesla said its net income also suffered, slumping 16% year-on-year.
That paled in comparison to the 71% drop in year-on-year profits the company reported during the first quarter, when sales were down 13%.
Tesla will hold a call with investors tonight to discuss the report, which highlighted Tesla's other ventures, calling this quarter "a seminal point in Tesla's history: the beginning of our transition from leading the electric vehicle and renewable energy industries to also becoming a leader in AI, robotics and related services."
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The company rolled out the first iteration of its robotaxi service in Austin in June, and the earnings report said the company's approach to the service would allow for rapid scaling and improved profitability. The company is also developing a humanoid robot called Optimus.
During the second quarter, Tesla's total automotive revenue slipped 16% while energy generation and storage revenue was off 7%. Services and other revenue grew by 17%.
Onlookers have blamed Tesla's flagging car sales on Musk's political activity, although during the previous quarter's call he said he didn't see "any reduction in demand" and, without evidence, dismissed protests against his company as "paid for."
Surveys have found that the company's brand reputation has taken a serious hit, particularly among liberal or Democratic car shoppers — who tend to be more likely, at least right now, to shop for an electric vehicle. Musk has stepped away from his leadership of DOGE and had a very public split with Donald Trump, but he remains interested in politics, recently floating the idea of launching a third party.
Another likely factor is increased competition among EV makers. In the U.S., the traditional automakers — who have lagged far behind Tesla on electric vehicles — are gradually eating into Tesla's market dominance. According to the latest data from Cox, Tesla accounts for 46.2% of EV sales in the U.S.; that figure used to be nearly 80%. GM now controls 13% of that market.
Globally, meanwhile, Chinese EV makers are ascendent.
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Tesla, which has long been known for a high rate of executive turnover, lost three senior leaders in the last two months.
The company also worried investors earlier this month when it failed to announce its annual shareholder meeting. Tesla is incorporated in Texas, where state law requires the company to hold the meeting within 13 months of the previous one. That meant a deadline of July 13.
On July 9, with no word from Tesla about the meeting, a group of large shareholders sent Tesla's board a letter raising concerns about the oversight. One day later, the company announced it was pushing its annual meeting back to November.
Tesla's share price ticked down slightly in after-hours trading following the news.
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