Tesla profit plunges in latest quarter as Musk's turn to politics continues to keep buyers away
NEW YORK (AP) — The fallout from Elon Musk’s plunge into politics a year ago is still hammering his Tesla business as both sales and profits dropped sharply again in the latest quarter.
The car company that has faced boycotts for months said Wednesday that revenue dropped 12% and profits slumped 16% in the three months through June as buyers continued to stay away.
“The perception of Elon Musk, its chief executive, has rubbed the sheen right out of what once was a darling and soaring automotive brand,” wrote Forrester analyst Dipanjan Chatterjee in an email. Tesla is “a toxic brand that is inseparable from its leader.”
Quarterly profits at the electric vehicle, battery and robotics company fell to $1.17 billion, or 33 cents a share, from $1.4 billion, or 40 cents a share. That was the third quarter in a row that profit dropped. On an adjusted basis, the company said it earned 40 cents a share, matching Wall Street estimates.
Revenue fell from $25.5 billion to $22.5 billion in the April through June period, slightly above Wall Street’s forecast.
Tesla shares fell 3% in after-hours trading.
Musk spent the company's earnings conference call talking less about car sales and more about robotaxis, automated driving software and robotics, which he says is the future of the company. But those businesses have yet to take off, and the gap between promise and profit was apparent in the second quarter.
“It appears management’s focus will now shift to robotaxis and away from deliveries growth,” said Morningstar analyst Seth Goldstein, referring to car sales.
A big challenge is that potential buyers not just in the U.S. but Europe are still balking at buying Teslas. Musk alienated many in the market for cars in Great Britain, France, Germany and elsewhere by embracing far-right politicians there. And rival electric vehicle makers such as China's BYD and German's Volkswagen have pounced on the weakness, stealing market share.
Tesla began a rollout in June of its paid robotaxi service in Austin, Texas, and hopes to introduce the driverless cabs in several other cities soon. Musk has said he expects to have hundreds of thousands of the cabs on U.S. roads by the end of next year.
In the post-earnings call, Musk said the service will be available to probably “half of the population of the U.S. by the end of the year — that’s at least our goal, subject to regulatory approvals.”
He added, “We are being very cautious. We don’t want to take any chances.”
The test run in Austin has mostly gone off without a hitch, though there have been a few alarming incidents, such as when a robotaxi went down a lane meant for opposing traffic.
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