NEW YORK: 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 percent and profits slumped 16 percent 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 were little changed in after-hours trading as investors wait to hear from Musk on the company’s earnings call later in the afternoon.
Musk, who helped elect President Donald Trump with a massive campaign donation and then headed his DOGE cost-cutting program, has been pinning the future of the company less on car sales and more on robotaxis, automated driving software and robotics. But those businesses are yet to take off, and the gap between promise and profits was apparent in the second quarter.
A big challenge is that potential buyers not just in the US 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 candidates for office on the continent. 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 of its paid pickup 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 US roads by the end of next year.
In a conference call after the results were announced, Musk said the service will be available to probably “half of the population of the US 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.
With driverless taxis, though, the billionaire who upended the space race and the EV manufacturing faces tough competition. The dominant provider now, Waymo, is already in several cities and recently logged its ten-millionth paid trip.
Meanwhile other threats loom. The new federal budget just passed by Congress eliminates a credit worth as much as $7,500 for buying an electric car. It also wipes out penalties for car makers to exceeding carbon emission standards. That threatens Tesla’s business of selling its “carbon credits” to traditional car companies that regularly fall short of emission standards.
Tesla generated $439 million from credit sales, down sharply from $890 million a year ago.
One way to boost sales that Musk has long promised: A cheaper model. The company now is planning to introduce that to the market in the last three months of the year. Tesla had previously said that was going to happen by June this year.
“It appears management’s focus will now shift to robotaxis and away from deliveries growth,” said Morningstar analyst Seth Goldstein, referring to the car sales.
“If Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy,” Musk said in his remarks, “it will be the most valuable company in the world.”
Musk also said he expected regulatory approval to introduce its so-called Full Self-Driving software in some parts of Europe by the end of the year. Musk had previously expected that to happen by March of this year. The feature, which is available in the US, is a misnomer because it is only a driver assistance feature.
Gross margins for the quarter, a measure of earnings for each dollar of revenue, fell to 17.2 percent from 18 percent a year earlier.
A highlight from the quarter was from something far removed from cars and robots: the company’s investment in bitcoin. That bet generated a $284 million paper gain, compared with a loss the previous quarter.
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Tesla profit plunges in latest quarter as Musk’s turn to politics continues to keep buyers away
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Tesla profit plunges in latest quarter as Musk’s turn to politics continues to keep buyers away
- Faced with boycotts for months, the car company’s profits slumped 16 percent in the three months through June
- Musk also alienated many in the market for cars in Europe by embracing far-right candidates for office on the continent
’Made in Europe’ or ‘Made with Europe’? Buy European push splits bloc
- Everyone in Europe agrees the EU needs to rescue its industry but the bloc is split over how far it should push a ‘Buy European’ approach in order to do so
BRUSSELS: Everyone in Europe agrees the EU needs to rescue its industry but the bloc is split over how far it should push a ‘Buy European’ approach in order to do so.
The European Commission, the EU’s executive arm, will next week propose new rules that are expected to include a requirement for companies in strategic sectors to produce in Europe if they want to receive public money.
But the definition of “European preference” has triggered debate, with calls especially from France for more “Made in Europe,” while other EU states such as Germany call for “Made with Europe.”
- Protecting Europe or European protectionism? -
French President Emmanuel Macron insisted the new rules would be about “protecting our industry” without “being protectionist,” by defending “certain strategic sectors, such as cleantech, chemicals, steel, cars or defense.”
Otherwise, he warned, “Europeans will be swept aside.”
But other EU countries, which are proponents of free trade, oppose the plans.
Swedish Prime Minister Ulf Kristersson said Europe should compete based on quality and innovation, not because it wanted to protect European markets.
“We do not want to protect European businesses that are basically not competitive,” Kristersson told the Financial Times newspaper last week.
But EU leaders during talks Thursday appeared to reach a consensus on the issue, pushing for the measure in certain specific sectors since they say Europe faces unfair competition from China and other countries.
“We are in favor of open markets,” German Finance Minister Lars Klingbeil said Monday. “But I also want to be very clear: if China changes the rules of the game, if we are confronted with overcapacity, subsidies, and the fact that markets in Europe are flooded, then Europe must defend itself.”
- In Europe or with Europe? -
Supporters want “Made in Europe” to be strictly defined, and only for industrial goods made from components manufactured in the European Economic Area, made of the EU’s 27 states as well as Iceland, Liechtenstein and Norway.
Critics say this definition would be too restrictive and instead call for a more flexible measure, like Germany’s Merz, who calls for “Made with Europe” not “Made in Europe.”
They also argue it would be difficult to apply in practice and risks destabilising European supply chains.
“Typically, even a vehicle assembled in Europe incorporates hundreds of specialized components sourced from all over the world. Many critical inputs cannot be competitively produced at scale in Europe,” Japanese carmaker Honda said.
Britain and Turkiye, for whom the EU is an important trading partner, have also privately expressed concern to Brussels about keeping their countries out.
Some EU capitals are worried about potential retaliatory measures from supplier countries, which would drag Europe into showdowns at a moment when it needs to strengthen its exports.
- What will the rules look like? -
The EU executive insists it has balanced the need to be open and protect firms.
The measure will be “targeted in three ways,” said the office of EU industry chief Stephane Sejourne — who is spearheading the push.
It will affect:
-- a limited number of critical components
-- a limited number of strategic sectors
-- only when public funding is involved.
The final proposal, which will be announced on February 25, could end up only touching a handful of sectors: the auto industry and those playing an essential role in the green transition and confronted by what the EU says unfair Chinese competition, such as solar panels, wind turbines and batteries.
Sejourne’s office insisted companies producing in the EU would be considered European and there will be “reciprocal commitments” with trusted partners.
A draft document seen by AFP says products made in countries outside the EU with rules similar to the bloc will be treated like those made in Europe.
Non-EU countries however remain watchful until the real proposal lands.
For example, there are still many unknowns including what the percentages of European or equivalent components will be required from manufacturers if they wish to continue accessing public money.
The European Commission, the EU’s executive arm, will next week propose new rules that are expected to include a requirement for companies in strategic sectors to produce in Europe if they want to receive public money.
But the definition of “European preference” has triggered debate, with calls especially from France for more “Made in Europe,” while other EU states such as Germany call for “Made with Europe.”
- Protecting Europe or European protectionism? -
French President Emmanuel Macron insisted the new rules would be about “protecting our industry” without “being protectionist,” by defending “certain strategic sectors, such as cleantech, chemicals, steel, cars or defense.”
Otherwise, he warned, “Europeans will be swept aside.”
But other EU countries, which are proponents of free trade, oppose the plans.
Swedish Prime Minister Ulf Kristersson said Europe should compete based on quality and innovation, not because it wanted to protect European markets.
“We do not want to protect European businesses that are basically not competitive,” Kristersson told the Financial Times newspaper last week.
But EU leaders during talks Thursday appeared to reach a consensus on the issue, pushing for the measure in certain specific sectors since they say Europe faces unfair competition from China and other countries.
“We are in favor of open markets,” German Finance Minister Lars Klingbeil said Monday. “But I also want to be very clear: if China changes the rules of the game, if we are confronted with overcapacity, subsidies, and the fact that markets in Europe are flooded, then Europe must defend itself.”
- In Europe or with Europe? -
Supporters want “Made in Europe” to be strictly defined, and only for industrial goods made from components manufactured in the European Economic Area, made of the EU’s 27 states as well as Iceland, Liechtenstein and Norway.
Critics say this definition would be too restrictive and instead call for a more flexible measure, like Germany’s Merz, who calls for “Made with Europe” not “Made in Europe.”
They also argue it would be difficult to apply in practice and risks destabilising European supply chains.
“Typically, even a vehicle assembled in Europe incorporates hundreds of specialized components sourced from all over the world. Many critical inputs cannot be competitively produced at scale in Europe,” Japanese carmaker Honda said.
Britain and Turkiye, for whom the EU is an important trading partner, have also privately expressed concern to Brussels about keeping their countries out.
Some EU capitals are worried about potential retaliatory measures from supplier countries, which would drag Europe into showdowns at a moment when it needs to strengthen its exports.
- What will the rules look like? -
The EU executive insists it has balanced the need to be open and protect firms.
The measure will be “targeted in three ways,” said the office of EU industry chief Stephane Sejourne — who is spearheading the push.
It will affect:
-- a limited number of critical components
-- a limited number of strategic sectors
-- only when public funding is involved.
The final proposal, which will be announced on February 25, could end up only touching a handful of sectors: the auto industry and those playing an essential role in the green transition and confronted by what the EU says unfair Chinese competition, such as solar panels, wind turbines and batteries.
Sejourne’s office insisted companies producing in the EU would be considered European and there will be “reciprocal commitments” with trusted partners.
A draft document seen by AFP says products made in countries outside the EU with rules similar to the bloc will be treated like those made in Europe.
Non-EU countries however remain watchful until the real proposal lands.
For example, there are still many unknowns including what the percentages of European or equivalent components will be required from manufacturers if they wish to continue accessing public money.
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