Tesla shares fell by 12% on Wednesday after the company reported second-quarter earnings that missed expectations, highlighting ongoing challenges in its automotive business. The electric car maker’s automotive revenue declined by 7% year-over-year to $19.9 billion, and its adjusted earnings margin also decreased. The company has been reducing prices and offering discounts to boost sales amid slowing demand and rising competition, particularly in China, a crucial market for Tesla.
Despite being the top seller of electric vehicles in the U.S., Tesla is losing market share to emerging competitors, partly due to its aging lineup of sedans and SUVs and CEO Elon Musk’s controversial public statements. Investors are divided, with some concerned about the core car business’s pressures, while others are optimistic about Musk’s vision for autonomous driving, AI, and robotaxis. Tesla’s stock has declined nearly 1% year-to-date, contrasting with the S&P 500’s more than 16% rise.
During the earnings call, Musk announced that Tesla is on track to deliver a new “affordable” mass-market car in the first half of next year, aiming to refresh its vehicle lineup. He also emphasized the future potential of robotaxis, envisioning a system where Tesla owners can authorize their vehicles for use in an Uber-like ride-hailing service with autonomous driving capabilities.
