So far in 2024, Elon Musk promised the release of a cheap EV model, a robotaxi, and a humanoid robot. What Tesla actually delivered were disappointing quarterly earnings.
Tesla shares dropped 12.32% in early trade on Wednesday, making the stock decline over 7.90% year-to-date after a month-long rally in July. Tesla has been the worst-performing “Magnificent 7” stock this year as it faces significant internal and external challenges.
The fall came after Tesla reported declining revenues and profits for the second quarter of 2024. This is the second disappointing report in a row after Tesla hammered its gross margins with heavy discounts and low deliveries. The company delivered more cars than expected in the second quarter, though still fewer than in the same period last year.
In the April-June period, Tesla’s revenues declined by 7% year-on-year to $19.9 billion, below market expectations. Gross margins were an appalling 14.7% of revenues, down from 16.4% in the first quarter.
Gross margins came in at $1.48 billion in the April-June period. Over half of that, roughly $890 million, resulted from regulatory credit sales.
Tesla has been struggling for years to keep its market share, formerly the biggest in the world. In 2019, Tesla controlled over 80% of the global EV market. Today, its market share is below 50%, losing the top spot to the Chinese BYD.
The company’s latest competitive model was released in 2019. Since then, CEO Elon Musk delivered only empty promises and the Cybertruck, a self-described disaster for the company. “We dug our own grave with the Cybertruck,” Musk said during an earnings call last year.
Looking to the future
Tesla’s stock has been extremely volatile this year as Elon Musk kept being contradictory about the company’s future.
In the first few months of the year, the stock dropped steadily to -40% year-to-date. Then, Musk said Tesla would launch its first robotaxi on August 8th, and the company posted better-than-expected quarterly deliveries. This rallied the stock price to roughly +10% year-to-date.
Then, Elon Musk delayed the robotaxi launch to October 10th and, today, the company posted disastrous quarterly earnings.
Meanwhile, a Reuters report showed Tesla canceled plans for its long-awaited cheap model. During the latest earnings call, however, Musk promised the first cheap model to roll out in early 2025. The CEO also promised that the first Tesla humanoid robot, dubbed Optimus, will be released to the public in 2026.
The pace of Musk’s promises accelerated in the past few months. Elon Musk has a long track record of overpromising and underdelivering. Tesla investors may have stopped believing his words.
