Tesla Stock Hit Hard Due to Dismal Vehicle Volume Forecast for 2024

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Tesla’s June quarter net profit dropped by 45% year over year to over $1.4 billion

Tesla’s predictions of slow vehicle volume growth and its failure to provide a clear schedule for its much-awaited robotaxis on Tuesday’s earnings call caused shares of the electric vehicle maker to plunge.

The firm stated that because it is preparing to introduce its next generation of vehicles and other products, it anticipates a “notably lower” vehicle volume growth rate in 2024 as compared to the previous year.

The Texas-based corporation did not reveal how many cars it hopes to create this year despite producing over 1.8 million last year.

It stated that the manufacture of new cars, including more affordable versions, is still scheduled to begin in the first half of the next year.

The current lineup of vehicles and the new ones will be manufactured on the same lines. According to the business, this strategy will enable Tesla to “prudently grow” its vehicle sales in a “more capex-efficient manner during uncertain times.”

“This should help us fully utilise our current expected maximum capacity of close to three million vehicles, enabling more than 50 per cent growth [in coming years] over 2023 production before investing in new manufacturing lines”, said the company.

The company’s shares, which had decreased by more than 8% in the previous year, ended Tuesday’s trading 2.04% lower.

Following the statement, it fell 7.77% to trading at $227.23 per share, 9 pm New York time.

Analysts in the industry stated that Tesla needs to step up its innovation efforts to remain competitive.

Tesla’s investors require results now perhaps more than in the company’s previous past. For both the robotaxis and the humanoid robot, they will need to arrive quickly, according to Thomas Monteiro, senior analyst at Investing.com.

Tesla has not yet made its robotaxi official. The August 8 unveiling was originally scheduled but it was moved to October to accommodate more development and prototype manufacturing.

Billionaire entrepreneur Elon Musk envisions a completely automated ride-sharing service, which includes the robotaxi.

Tesla’s June quarter net profit dropped by 45% year over year to over $1.4 billion, primarily due to a decline in the average selling price of its cars. However, quarterly, it was up 31%.

Revenue for the April-June quarter increased by 2% to about $25.5 billion, beyond analysts’ projections of $24.7 billion.

The business posted sales of at least $20 billion for the ninth consecutive quarter. Against expectations of 62 cents, earnings per share were 42 cents.

In the most recent quarter, the company’s operational income dropped by 33% annually to over $1.6 billion, while operating expenses increased by 39% to nearly $3 billion.

According to Tesla, a decrease in vehicle deliveries, an increase in artificial intelligence and research expenses, and a decrease in the average selling price of cars are the key factors affecting operating income.

Without providing further information, Tesla stated in a letter to stakeholders that it generated record quarterly revenue despite a challenging operating environment.

According to the corporation, Tesla’s non-automotive division is an “increasingly profitable part.”

The energy generation and storage business, which sells large batteries for residential, commercial, and utility usage, had a 100% growth in revenue to more than $3 billion. In comparison, the car division’s revenue fell 7% to $19.8 billion.

In the second quarter, its energy storage business expanded to a record 9.4 GWh of deployments.

Regulatory credits related to automobile sales totalled $890 million in the most recent quarter, up from $282 million at the same time the previous year.

Government organizations can grant certificates known as regulatory credits to businesses, enabling them to emit a specific quantity of pollutants.

Regarding Tesla, the business is able to sell these credits to other automakers that require them in order to meet legal requirements.

In the previous quarters, this has given Tesla a sizeable revenue stream. Four years after the futuristic car’s introduction, Tesla sent its first Cybertrucks in November.

According to Tesla, the production of cybertrucks more than tripled in the most recent quarter and is still on pace to turn a profit by the end of the year. It has previously stated that it could produce over 125,00 Cybertrucks annually.