Tesla profit down as buyers snub Elon Musk’s EVs

Elon Musk-led Tesla is struggling following the billionaire’s involvement with the Trump administration, but he is bullish about the outlook, noting robotaxis are set to ‘greatly expand’.

Tesla’s net income plunged 16 per cent in the second quarter, marking another quarter of steep declines at the company as automotive sales continue to fall.

Speaking with Wall Street on Wednesday, Tesla chief executive Elon Musk highlighted plans to release a lower-priced Model Y electric vehicle, spoke about his hopes for a new pay package from the company’s board in fall, and talked up plans to “greatly expand” Tesla’s robotaxi service to half the country by the end of the year.

“We’re in this weird transition period where we’ll lose a lot of incentives in the US,” he said, alluding to an expiring tax credit designed to boost EV sales.

“But we’re still at the relatively early stages of autonomy.

“We probably could have a few rough quarters. I’m not saying we will, but we could.”

Mr Musk said he still expected autonomous vehicles to improve Tesla’s finances by the end of next year.

The electric-vehicle maker’s second-quarter revenue declined after a big drop in automotive deliveries, which were down 13.5 per cent from a year earlier.

Tesla reported $US1.17bn ($1.77bn) in net-income, down from $US1.4bn the year prior. The company also reported $US22.5bn in revenue for the quarter, down 12 per cent. Revenue from its automotive business fell 16 per cent. The energy business fell 7 per cent.

Tesla said its declines in revenue and profitability were due to the drop in sales and a reduction in regulatory credits.

Tesla reported $US439m in revenue from other automakers that pay Tesla for carbon credits to offset their sale of conventional vehicles, less than half what it reported a year earlier.

Many of those credits will go away this fall after recent changes to federal tax law eliminated many subsidies for EVs and environmental remedies.

Tesla’s finances have been in a free fall since last fall, after Mr Musk’s entrance into partisan politics brought protests and worsened the company’s reputation in once-popular regions such as California and Europe.

Mr Musk’s departure from the Trump administration in May and subsequent public disputes with the President have further complicated his relationship with car buyers, who have more options than ever when shopping for an EV in the US and China.

US President Donald Trump speaks during a news conference with Elon Musk in the Oval Office of the White House, in Washington, before their falling out. Picture: Evan Vucci/AP Photo

Tesla has turned to updates and financing incentives to capture the attention of shoppers.

Since March, the company has refreshed its popular Model Y crossover SUV, made updates to its luxury Model S and Model X vehicles, and released a pared-down, lower-cost version of its Cybertruck.

Despite the updates, the company sold just 384,122 vehicles in the second quarter, down from 443,956 the year before.

Mr Musk has encouraged investors to focus their attention on future revenue streams stemming from its investments in autonomous vehicles and robotics.

In June, Tesla launched a small fleet of robotaxis near its headquarters in Austin, Texas.

The ride-share app is currently restricted to the downtown and South Congress neighbourhoods. Access is by invitation only and priced at $US6.90 a ride, up from $US4.20 a few weeks ago.

Mr Musk said the company expected to expand its service area in Austin in the coming weeks. The company is also seeking to expand to San Francisco’s Bay Area, plus Nevada and Florida.

If the company can get approvals, the autonomous ride-hailing vehicles could be available to half of the country’s population, Mr Musk said on a call with investors and analysts on Wednesday.

“Autonomy is the story,” he said.

The company faces more headwinds going into the third quarter as the federal government rewrites policies around EV incentives, eliminating the $US7500 consumer tax credit, as well as many of the valuable carbon credits paid by other car manufacturers to Tesla to offset the sale of gasoline-powered vehicles.

The Wall Street Journal