Tesla's Q2 Earnings: 45% Profit Drop, Increased Competition, and Regulatory Credit Sales

Palo Alto, California United States of America
Operating expenses soared 39% to $2.97 billion with capital expenditures on AI infrastructure amounting to $600 million.
Tesla plans to release more details on fully-automated robotaxis in October.
Tesla reported a 45% profit drop in Q2 2024, earning $1.5 billion on revenue of $25.5 billion.
Tesla sold $890 million in regulatory credits, up from $282 million a year earlier.
The company experienced two consecutive quarters of year-over-year sales declines and increased competition from established automakers.
Tesla's Q2 Earnings: 45% Profit Drop, Increased Competition, and Regulatory Credit Sales

Tesla's Q2 earnings report has revealed a 45% profit drop compared to Q2 2023, earning $1.5 billion in Q2 2024 on revenue of $25.5 billion. The electric car company's profits have been under pressure due to falling sales of its electric cars. Tesla sold $890 million in regulatory credits in Q2 2024, up from $282 million a year earlier.

The company has faced increased competition from established automakers and a slowing EV sales growth market. Tesla reported adjusted income of $1.8 billion in Q2 2023, lower than analysts' forecast and a decrease from the previous year's earnings. The electric vehicle company experienced two consecutive quarters of year-over-year sales declines, the first time since going public and the only one before the pandemic.

Tesla offered attractive financing options in China, Germany, and the US to boost sales of its EVs. Operating expenses soared 39% from a year earlier in Q2 to $2.97 billion with capital expenditures on AI infrastructure amounting to $600 million.

Tesla's bottom line was helped by sales of regulatory credits to other automakers that need them in order to meet emissions standards. The company is also investing heavily in artificial intelligence infrastructure, with CEO Elon Musk making promises about Tesla's future in autonomous driving and robotics.

Despite these challenges, Tesla remains convinced that the world is moving toward fully electric transportation systems, not just for cars but for planes and ships as well. The company plans to release more details on fully-automated robotaxis in October.

Tesla's profit margin has been getting hammered by EV discounts and hefty AI spending. However, investors remain optimistic about the company's future, with the Nasdaq up 20% over that stretch. Guggenheim analyst Ronald Jewsikow predicts that Tesla's automotive gross margin will miss estimates.

The company is also facing federal investigations into some of Musk's claims about Full Self Driving capabilities. Tesla has paused its plans to build an assembly plant in Mexico due to a threat by Republican nominee Donald Trump to slap tariffs on vehicles imported from Mexico. Musk is a strong Trump supporter and has reportedly pledged tens of millions of dollars toward the former president's re-election efforts.

Tesla shares fell more than 8% in after-hours trading following the earnings report. However, shares are up about 1% so far this year through Tuesday's close, after being down as much as 44% earlier this year.


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Confidence

80%

Doubts
  • The accuracy of Elon Musk's claims about Full Self Driving capabilities and federal investigations.
  • The impact of potential tariffs on Tesla's plans to build an assembly plant in Mexico.

Sources

79%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

Tesla profit plunges

CNN News Site: In-Depth Reporting and Analysis with Some Financial Conflicts and Sensational Language Chris Isidore Tuesday, 23 July 2024 20:16
  • Unique Points
    • Tesla faced increased competition from established automakers and a slowing EV sales growth market.
    • Tesla reported adjusted income of $1.8 billion in Q2 2023, lower than analysts’ forecast and a decrease from the previous year’s earnings.
    • Tesla experienced two consecutive quarters of year-over-year sales declines, the first time since going public and the only one before the pandemic.
  • Accuracy
    • Tesla's profit in Q2 2023 plunged over 40% compared to the same quarter in 2022.
    • Net income for Q2 was $1.48 billion on revenue of $25.5 billion, which included $890 million in regulatory credits.
    • Tesla earned $1.5 billion in Q2 2024 on revenue of $25.5 billion
    • Operating expenses soared 39% from a year earlier in Q2 to $2.97 billion
  • Deception (30%)
    The article contains selective reporting and emotional manipulation. The author focuses on the decline in Tesla's profits and sales growth without mentioning the reasons behind it - increased competition and a slowing EV market. This creates a negative impression of Tesla without providing context or acknowledging external factors. Additionally, the author quotes Elon Musk's disparaging comments about competitors' EVs, which can be seen as emotionally manipulative and intended to elicit strong reactions from readers.
    • The results underscore how Tesla, a pioneer in bringing electric vehicles to American drivers, now faces more intense competition from rivals at home and abroad.
    • He said Tesla remains convinced the world is moving toward fully electric transportation systems, not just for cars, but for planes and ships as well.
    • Shares of Tesla (TSLA) fell more than 8% in after-hours trading.
    • Tesla did not give a new sales target for the full year. But it did warn that “In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023.”
  • Fallacies (85%)
    The author makes several statements that contain informal fallacies. First, in the second sentence, the author states 'And with the EV market maturing, the growth in consumer interest for EVs has slowed.' This is a hasty generalization fallacy as it assumes that because one aspect of the electric vehicle market (growth) has slowed down, that consumer interest as a whole has also slowed. Secondly, in the fifth paragraph, Musk's statement 'My predictions on this have been overly optimistic in the past.' is an example of an appeal to past mistakes fallacy. Lastly, there are several instances of inflammatory rhetoric used throughout the article such as 'stark contrast', 'intense competition', and 'pioneer in bringing electric vehicles to American drivers now faces more intense competition from rivals at home and abroad'. These statements do not add any logical value to the article but rather serve to elicit an emotional response from the reader.
    • ] New York CNN – And with the EV market maturing, the growth in consumer interest for EVs has slowed.[
    • My predictions on this have been overly optimistic in the past.
  • Bias (95%)
    The author expresses a negative opinion towards Tesla's profit plunge and the slowing growth of EV sales. He also quotes Tesla CEO Elon Musk disparaging the quality of EVs from other automakers and expresses skepticism about Musk's predictions regarding fully-automated robotaxis. The author does not provide any context or counterargument to these negative statements, creating a biased narrative.
    • He said Tesla remains convinced the world is moving toward fully electric transportation systems, not just for cars, but for planes and ships as well.
      • Musk also cautioned: ‘My predictions on this have been overly optimistic in the past.’
        • New York CNN – Tesla profit in the second quarter plunged more than 40% from a year ago, as the electric vehicle company has faced both more EV competition from established automakers and a slowing of overall EV sales growth.
          • Shares of Tesla (TSLA) fell more than 8% in after-hours trading.
            • Tesla did not give a new sales target for the full year. But it did warn that ‘In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023.’
              • The drop in profits is a stark contrast for a company that grew to become the world’s most valuable automaker on surging sales and profitability.
              • Site Conflicts Of Interest (100%)
                None Found At Time Of Publication
              • Author Conflicts Of Interest (100%)
                None Found At Time Of Publication

              75%

              The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
              (Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

              A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

              Tesla's profit margin is getting hammered by EV discounts and hefty AI spending

              CNBC News Lora Kolodny, Wednesday, 24 July 2024 00:58
              • Unique Points
                • Tesla offered attractive financing options in China, Germany, and the US to boost sales of its EVs.
                • Operating expenses soared 39% from a year earlier in Q2 to $2.97 billion with capital expenditures on AI infrastructure amounting to $600 million.
              • Accuracy
                • Tesla's operating margin shrank to 14.4% in Q2 2024 from 18.7% a year earlier, marking the fourth straight quarter of shrinkage.
                • Net income for Q2 was $1.48 billion on revenue of $25.5 billion, which included $890 million in regulatory credits.
              • Deception (30%)
                The article contains selective reporting as it only mentions the shrinking profit margins and the reasons for it without providing context about Tesla's overall financial performance or comparing it to other companies in the industry. The authors also use emotional manipulation by stating that investors are 'watching profit margins deteriorate' and quoting Tesla CEO Elon Musk making lofty promises about the company's future, which could influence readers to feel negatively towards Tesla. Additionally, there is a lie by omission as the article fails to mention that Tesla's revenue grew by 12% year-over-year in Q2 2024.
                • Expenses are soaring as the company spends on the artificial intelligence infrastructure Musk says is needed to turn Tesla EVs into self-driving cars, and to develop humanoid robots capable of doing factory work and more.
                • Tesla shares tumbled about 8% in extended trading on Tuesday to $227.23.
                • The company reported just $1.48 billion in net income on revenue of $25.5 billion, which included $890 million in regulatory credits.
              • Fallacies (75%)
                The authors make an appeal to authority by quoting Tesla's chief accounting officer, Vaibhav Taneja, stating that 'affordability remains top of mind for customers.' They also quote Guggenheim's Ronald Jewsikow predicting that Tesla's automotive gross margin would miss estimates due to large discounting actions. These quotes do not constitute fallacies on their own, but they do contribute to the overall tone of the article which may be influencing the reader.
                • ][The authors] quote Tesla's chief accounting officer, Vaibhav Taneja, stating that 'affordability remains top of mind for customers.'[[
                • '][Guggenheim's Ronald Jewsikow] predicting that Tesla's automotive gross margin would miss estimates, ‘driven by large discounting actions.’[[
              • Bias (100%)
                None Found At Time Of Publication
              • Site Conflicts Of Interest (100%)
                None Found At Time Of Publication
              • Author Conflicts Of Interest (100%)
                None Found At Time Of Publication

              92%

              The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
              (Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

              A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

              Tesla Q2 Earnings Report Reveals 45% Profit Drop Amid Weak E.V. Sales

              The Name Of The NZ Prefix. I PWA NZI.P.Was Dropped. Neal E. Tuesday, 23 July 2024 20:11
              • Unique Points
                • Tesla reported a 45% drop in profit in Q2 2024 compared to Q2 2023
                • Tesla earned $1.5 billion in Q2 2024 on revenue of $25.5 billion
                • Tesla sold $890 million in regulatory credits in Q2 2024
              • Accuracy
                No Contradictions at Time Of Publication
              • Deception (95%)
                The article reports facts about Tesla's Q2 earnings and sales figures. However, the author makes editorializing statements that could be perceived as deceptive or misleading. For example, when stating 'Tesla shares have jumped 40 percent since the end of May in large part because investors are betting that Musk will successfully remake Tesla into an artificial intelligence company that operates a driverless taxi service and sells robots for manufacturing and other tasks.', this statement is not a fact but rather an opinion. The author also uses the phrase 'big bets' which could be perceived as implying risk or uncertainty, when in reality, these are strategic business moves by Tesla. Additionally, the article does not disclose any sources for some of the information presented.
                • Tesla shares have jumped 40 percent since the end of May in large part because investors are betting that Musk will successfully remake Tesla into an artificial intelligence company that operates a driverless taxi service and sells robots for manufacturing and other tasks.
              • Fallacies (95%)
                The article contains an appeal to authority fallacy when it states 'Tesla shares have jumped 40 percent since the end of May in large part because investors are betting that Musk will successfully remake Tesla into an artificial intelligence company that operates a driverless taxi service and sells robots for manufacturing and other tasks.' This statement implies that the reason for the increase in Tesla's stock price is solely due to this belief, but it does not provide any evidence or data to support this claim.
                • Tesla shares have jumped 40 percent since the end of May in large part because investors are betting that Musk will successfully remake Tesla into an artificial intelligence company that operates a driverless taxi service and sells robots for manufacturing and other tasks.
              • Bias (95%)
                The author expresses a neutral tone throughout the article, but there is an implicit bias towards Tesla's future prospects being uncertain due to the mention of 'pressure' on Tesla and Elon Musk to 'find new ways to grow and make money'. This bias is not explicit, but it can be inferred from the context.
                • Tesla shares have jumped 40 percent since the end of May in large part because investors are betting that Musk will successfully remake Tesla into an artificial intelligence company that operates a driverless taxi service and sells robots for manufacturing and other tasks.
                • Site Conflicts Of Interest (100%)
                  None Found At Time Of Publication
                • Author Conflicts Of Interest (100%)
                  None Found At Time Of Publication